AminologicsLtd (KOSDAQ:074430) Has A Rock Solid Balance Sheet
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that Aminologics Co.,Ltd. (KOSDAQ:074430) does use debt in its business. But the more important question is: how much risk is that debt creating?
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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.
What Is AminologicsLtd's Debt?
As you can see below, at the end of September 2025, AminologicsLtd had ₩12.4b of debt, up from ₩1.00b a year ago. Click the image for more detail. But on the other hand it also has ₩61.4b in cash, leading to a ₩49.0b net cash position.
How Healthy Is AminologicsLtd's Balance Sheet?
The latest balance sheet data shows that AminologicsLtd had liabilities of ₩26.3b due within a year, and liabilities of ₩620.9m falling due after that. Offsetting this, it had ₩61.4b in cash and ₩6.43b in receivables that were due within 12 months. So it actually has ₩40.9b more liquid assets than total liabilities.
This surplus strongly suggests that AminologicsLtd has a rock-solid balance sheet (and the debt is of no concern whatsoever). With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Simply put, the fact that AminologicsLtd has more cash than debt is arguably a good indication that it can manage its debt safely.
See our latest analysis for AminologicsLtd
It was also good to see that despite losing money on the EBIT line last year, AminologicsLtd turned things around in the last 12 months, delivering and EBIT of ₩1.7b. The balance sheet is clearly the area to focus on when you are analysing debt. But it is AminologicsLtd'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 trend.
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. AminologicsLtd may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Over the most recent year, AminologicsLtd recorded free cash flow worth 72% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.
Summing Up
While it is always sensible to investigate a company's debt, in this case AminologicsLtd has ₩49.0b in net cash and a decent-looking balance sheet. The cherry on top was that in converted 72% of that EBIT to free cash flow, bringing in ₩1.3b. So is AminologicsLtd's debt a risk? It doesn't seem so to us. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 3 warning signs for AminologicsLtd that you should be aware of before investing here.
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.