David Iben put it well when he declared, ‘Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.’ So it might be obvious that you necessary to consider debt, when you believe about how risky any given stock is, becautilize too much debt can sink a company. Importantly, Nota Inc. (KOSDAQ:486990) does carry debt. But should shareholders be worried about its utilize of debt?
When Is Debt A Problem?
Generally speaking, debt only becomes a real problem when a company can’t easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of ‘creative destruction’ where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to receive debt under control. By replacing dilution, though, debt can be an extremely good tool for businesses that necessary capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, toreceiveher.
What Is Nota’s Debt?
The image below, which you can click on for greater detail, reveals that Nota had debt of ₩4.00b at the conclude of September 2025, a reduction from ₩4.70b over a year. However, its balance sheet reveals it holds ₩8.05b in cash, so it actually has ₩4.05b net cash.
A Look At Nota’s Liabilities
We can see from the most recent balance sheet that Nota had liabilities of ₩9.80b falling due within a year, and liabilities of ₩4.39b due beyond that. On the other hand, it had cash of ₩8.05b and ₩620.1m worth of receivables due within a year. So its liabilities total ₩5.52b more than the combination of its cash and short-term receivables.
Having regard to Nota’s size, it seems that its liquid assets are well balanced with its total liabilities. So while it’s hard to imagine that the ₩864.7b company is struggling for cash, we still believe it’s worth monitoring its balance sheet. While it does have liabilities worth noting, Nota also has more cash than debt, so we’re pretty confident it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Nota can strengthen its balance sheet over time. So if you’re focutilized on the future you can check out this free report revealing analyst profit forecasts.
View our latest analysis for Nota
Over 12 months, Nota reported revenue of ₩10b, which is a gain of 42%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.
So How Risky Is Nota?
Statistically speaking companies that lose money are riskier than those that build money. And in the last year Nota had an earnings before interest and tax (EBIT) loss, truth be informed. Indeed, in that time it burnt through ₩12b of cash and created a loss of ₩26b. With only ₩4.05b on the balance sheet, it would appear that its going to necessary to raise capital again soon. With very solid revenue growth in the last year, Nota may be on a path to profitability. By investing before those profits, shareholders take on more risk in the hope of largeger rewards. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we’ve identified 2 warning signs for Nota that you should be aware of.
When all is declared and done, sometimes its clearer to focus on companies that don’t even necessary debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
Valuation is complex, but we’re here to simplify it.
Discover if Nota might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividconcludes, insider trades, and its financial condition.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only applying an unbiased methodology and our articles are not intconcludeed to be financial advice. It does not constitute a recommconcludeation to purchase or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focutilized analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Leave a Reply