Is GENINUS (KOSDAQ:389030) A Risky Investment?
Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that GENINUS Inc. (KOSDAQ:389030) does have debt on its balance sheet. But should shareholders be worried about its use of debt?
Why Does Debt Bring Risk?
Debt assists a business until the business has trouble paying it off, either with new capital or with free 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 get debt under control. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.
How Much Debt Does GENINUS Carry?
The image below, which you can click on for greater detail, shows that at September 2025 GENINUS had debt of ₩7.95b, up from ₩4.62b in one year. However, it does have ₩14.6b in cash offsetting this, leading to net cash of ₩6.64b.
How Healthy Is GENINUS' Balance Sheet?
We can see from the most recent balance sheet that GENINUS had liabilities of ₩23.3b falling due within a year, and liabilities of ₩1.12b due beyond that. Offsetting these obligations, it had cash of ₩14.6b as well as receivables valued at ₩4.14b due within 12 months. So it has liabilities totalling ₩5.69b more than its cash and near-term receivables, combined.
Of course, GENINUS has a market capitalization of ₩96.7b, so these liabilities are probably manageable. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. While it does have liabilities worth noting, GENINUS also has more cash than debt, so we're pretty confident it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since GENINUS will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.
See our latest analysis for GENINUS
Over 12 months, GENINUS reported revenue of ₩8.8b, which is a gain of 31%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.
So How Risky Is GENINUS?
We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year GENINUS had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of ₩9.7b and booked a ₩13b accounting loss. But at least it has ₩6.64b on the balance sheet to spend on growth, near-term. GENINUS's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. By investing before those profits, shareholders take on more risk in the hope of bigger 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 example GENINUS has 2 warning signs (and 1 which is a bit concerning) we think you should know about.
If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.
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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.