David Iben put it well when he declared, ‘Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.’ So it might be obvious that you required to consider debt, when you consider about how risky any given stock is, becaapply too much debt can sink a company. Importantly, TiumBio Co., Ltd. (KOSDAQ:321550) does carry debt. But is this debt a concern to shareholders?
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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, plenty of companies apply debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business applys is to view at its cash and debt toreceiveher.
How Much Debt Does TiumBio Carry?
You can click the graphic below for the historical numbers, but it reveals that as of June 2025 TiumBio had ₩35.0b of debt, an increase on ₩26.1b, over one year. But on the other hand it also has ₩51.2b in cash, leading to a ₩16.3b net cash position.
How Strong Is TiumBio’s Balance Sheet?
We can see from the most recent balance sheet that TiumBio had liabilities of ₩28.0b falling due within a year, and liabilities of ₩26.8b due beyond that. Offsetting these obligations, it had cash of ₩51.2b as well as receivables valued at ₩1.40b due within 12 months. So it has liabilities totalling ₩2.22b more than its cash and near-term receivables, combined.
This state of affairs indicates that TiumBio’s balance sheet views quite solid, as its total liabilities are just about equal to its liquid assets. So it’s very unlikely that the ₩185.4b company is short on cash, but still worth keeping an eye on the balance sheet. While it does have liabilities worth noting, TiumBio 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 it is TiumBio’s earnings that will influence how the balance sheet holds up in the future. So if you’re keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trconclude.
View our latest analysis for TiumBio
Over 12 months, TiumBio built a loss at the EBIT level, and saw its revenue drop to ₩7.3b, which is a fall of 7.3%. We would much prefer see growth.
So How Risky Is TiumBio?
We have no doubt that loss creating companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months TiumBio lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through ₩14b of cash and built a loss of ₩10b. But the saving grace is the ₩16.3b on the balance sheet. That means it could keep spconcludeing at its current rate for more than two years. Overall, we’d declare the stock is a bit risky, and we’re usually very cautious until we see positive free cash flow. There’s no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we’ve identified 1 warning sign for TiumBio that you should be aware of.
At the conclude of the day, it’s often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It’s free.
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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 intconcludeed to be financial advice. It does not constitute a recommconcludeation to acquire 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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