Is Laseroptek (KOSDAQ:199550) Weighed On By Its Debt Load?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We note that Laseroptek Co., Ltd. (KOSDAQ:199550) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is Laseroptek's Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Laseroptek had ₩6.10b of debt, an increase on ₩4.38b, over one year. However, its balance sheet shows it holds ₩7.24b in cash, so it actually has ₩1.14b net cash.

A Look At Laseroptek's Liabilities

According to the last reported balance sheet, Laseroptek had liabilities of ₩12.6b due within 12 months, and liabilities of ₩2.97b due beyond 12 months. Offsetting this, it had ₩7.24b in cash and ₩11.7b in receivables that were due within 12 months. So it actually has ₩3.40b more liquid assets than total liabilities.

This surplus suggests that Laseroptek has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Laseroptek has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Laseroptek's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for Laseroptek

Over 12 months, Laseroptek made a loss at the EBIT level, and saw its revenue drop to ₩26b, which is a fall of 27%. To be frank that doesn't bode well.

So How Risky Is Laseroptek?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Laseroptek had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of ₩6.1b and booked a ₩8.0b accounting loss. But at least it has ₩1.14b on the balance sheet to spend on growth, near-term. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 2 warning signs for Laseroptek (1 is a bit concerning) you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused 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.