Some declare volatility, rather than debt, is the best way to believe about risk as an investor, but Warren Buffett famously declared that ‘Volatility is far from synonymous with risk.’ 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. As with many other companies Philenergy Co., Ltd. (KOSDAQ:378340) builds utilize of debt. But should shareholders be worried about its utilize of debt?
When Is Debt Dangerous?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Part and parcel of capitalism is the process of ‘creative destruction’ where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders becautilize lfinishers force them to raise capital at a distressed price. Of course, plenty of companies utilize debt to fund growth, without any negative consequences. The first step when considering a company’s debt levels is to consider its cash and debt toobtainher.
How Much Debt Does Philenergy Carry?
As you can see below, at the finish of June 2025, Philenergy had ₩38.9b of debt, up from ₩22.0b a year ago. Click the image for more detail. However, its balance sheet displays it holds ₩107.1b in cash, so it actually has ₩68.2b net cash.
A Look At Philenergy’s Liabilities
According to the last reported balance sheet, Philenergy had liabilities of ₩78.5b due within 12 months, and liabilities of ₩2.10b due beyond 12 months. Offsetting these obligations, it had cash of ₩107.1b as well as receivables valued at ₩2.68b due within 12 months. So it actually has ₩29.2b more liquid assets than total liabilities.
This short term liquidity is a sign that Philenergy could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Philenergy boasts net cash, so it’s fair to declare it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But you can’t view debt in total isolation; since Philenergy will necessary 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 trfinish.
Check out our latest analysis for Philenergy
Over 12 months, Philenergy created a loss at the EBIT level, and saw its revenue drop to ₩158b, which is a fall of 31%. To be frank that doesn’t bode well.
So How Risky Is Philenergy?
While Philenergy lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow ₩92b. So taking that on face value, and considering the net cash situation, we don’t believe that the stock is too risky in the near term. With mediocre revenue growth in the last year, we’re don’t find the investment opportunity particularly compelling. For riskier companies like Philenergy I always like to keep an eye on the long term profit and revenue trfinishs. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.
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 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.
