Howard Marks put it nicely when he declared 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.’ It’s only natural to consider a company’s balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, Samsung C&T Corporation (KRX:028260) does carry debt. But the real question is whether this debt is creating the company risky.
When Is Debt A Problem?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that required capital to invest in growth at high rates of return. When we consider about a company’s utilize of debt, we first view at cash and debt toreceiveher.
How Much Debt Does Samsung C&T Carry?
As you can see below, Samsung C&T had ₩3.42t of debt at September 2025, down from ₩4.16t a year prior. But on the other hand it also has ₩5.89t in cash, leading to a ₩2.47t net cash position.
How Healthy Is Samsung C&T’s Balance Sheet?
Zooming in on the latest balance sheet data, we can see that Samsung C&T had liabilities of ₩13t due within 12 months and liabilities of ₩13t due beyond that. Offsetting this, it had ₩5.89t in cash and ₩7.17t in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩13t.
While this might seem like a lot, it is not so bad since Samsung C&T has a huge market capitalization of ₩47t, and so it could probably strengthen its balance sheet by raising capital if it requireded to. But it’s clear that we should definitely closely examine whether it can manage its debt without dilution. Despite its noteworthy liabilities, Samsung C&T boasts net cash, so it’s fair to state it does not have a heavy debt load!
View our latest analysis for Samsung C&T
Fortunately, Samsung C&T grew its EBIT by 4.3% in the last year, creating that debt load view even more manageable. There’s no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Samsung C&T can strengthen its balance sheet over time. So if you want to see what the professionals consider, you might find this free report on analyst profit forecasts to be interesting.
Finally, a company can only pay off debt with cold hard cash, not accounting profits. Samsung C&T may have net cash on the balance sheet, but it is still interesting to view at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, becautilize that will influence both its required for, and its capacity to manage debt. During the last three years, Samsung C&T produced sturdy free cash flow equating to 62% of its EBIT, about what we’d expect. This cold hard cash means it can reduce its debt when it wants to.
Summing Up
While Samsung C&T does have more liabilities than liquid assets, it also has net cash of ₩2.47t. So we don’t have any problem with Samsung C&T’s utilize of debt. Over time, share prices tfinish to follow earnings per share, so if you’re interested in Samsung C&T, you may well want to click here to check an interactive graph of its earnings per share history.
Of course, if you’re the type of investor who prefers purchaseing stocks without the burden of debt, then don’t hesitate to discover our exclusive list of net cash growth stocks, today.
New: Manage All Your Stock Portfolios in One Place
We’ve created the ultimate portfolio companion for stock investors, and it’s free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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 intfinished to be financial advice. It does not constitute a recommfinishation 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