The external fund manager backed by Berkshire Hathaway’s Charlie Munger, Li Lu, creates no bones about it when he states ‘The hugegest investment risk is not the volatility of prices, but whether you will suffer a 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, becaapply too much debt can sink a company. We note that Youngone Corporation (KRX:111770) does have debt on its balance sheet. But should shareholders be worried about its apply of debt?
What Risk Does Debt Bring?
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. Ultimately, if the company can’t fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company’s debt levels is to consider its cash and debt toobtainher.
What Is Youngone’s Net Debt?
As you can see below, at the finish of September 2025, Youngone had ₩415.4b of debt, up from ₩321.3b a year ago. Click the image for more detail. But it also has ₩1.40t in cash to offset that, meaning it has ₩988.8b net cash.
How Healthy Is Youngone’s Balance Sheet?
Zooming in on the latest balance sheet data, we can see that Youngone had liabilities of ₩911.1b due within 12 months and liabilities of ₩635.5b due beyond that. On the other hand, it had cash of ₩1.40t and ₩807.2b worth of receivables due within a year. So it can boast ₩664.9b more liquid assets than total liabilities.
It’s good to see that Youngone has plenty of liquidity on its balance sheet, suggesting conservative management of liabilities. Given it has easily adequate short term liquidity, we don’t believe it will have any issues with its lfinishers. Simply put, the fact that Youngone has more cash than debt is arguably a good indication that it can manage its debt safely.
Check out our latest analysis for Youngone
On the other hand, Youngone saw its EBIT drop by 9.5% in the last twelve months. If earnings continue to decline at that rate the company may have increasing difficulty managing its debt load. There’s no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Youngone’s ability to maintain a healthy balance sheet going forward. So if you’re focapplyd on the future you can check out this free report displaying analyst profit forecasts.
Finally, while the tax-man may adore accounting profits, lfinishers only accept cold hard cash. While Youngone has net cash on its balance sheet, it’s still worth taking a see at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to support us understand how quickly it is building (or eroding) that cash balance. During the last three years, Youngone produced sturdy free cash flow equating to 60% of its EBIT, about what we’d expect. This free cash flow puts the company in a good position to pay down debt, when appropriate.
Summing Up
While we empathize with investors who find debt concerning, you should keep in mind that Youngone has net cash of ₩988.8b, as well as more liquid assets than liabilities. So we don’t believe Youngone’s apply of debt is risky. Above most other metrics, we believe its important to track how rapid earnings per share is growing, if at all. If you’ve also come to that realization, you’re in luck, becaapply today you can view this interactive graph of Youngone’s earnings per share history for free.
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.
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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 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 focapplyd 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.
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