Hyundai MobisLtd (KRX:012330) Has A Rock Solid Balance Sheet

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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, Hyundai Mobis Co.,Ltd (KRX:012330) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

What Is Hyundai MobisLtd's Net Debt?

As you can see below, at the end of September 2025, Hyundai MobisLtd had ₩3.22t of debt, up from ₩2.67t a year ago. Click the image for more detail. However, its balance sheet shows it holds ₩12t in cash, so it actually has ₩8.48t net cash.

A Look At Hyundai MobisLtd's Liabilities

According to the last reported balance sheet, Hyundai MobisLtd had liabilities of ₩14t due within 12 months, and liabilities of ₩8.21t due beyond 12 months. Offsetting this, it had ₩12t in cash and ₩11t in receivables that were due within 12 months. So it can boast ₩822.8b more liquid assets than total liabilities.

This short term liquidity is a sign that Hyundai MobisLtd could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Hyundai MobisLtd boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Hyundai MobisLtd

On top of that, Hyundai MobisLtd grew its EBIT by 31% over the last twelve months, and that growth will make it easier to handle its debt. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Hyundai MobisLtd can strengthen its balance sheet over time. So if you want to see what the professionals think, 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. While Hyundai MobisLtd has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Over the last three years, Hyundai MobisLtd recorded free cash flow worth a fulsome 98% of its EBIT, which is stronger than we'd usually expect. That positions it well to pay down debt if desirable to do so.

Summing Up

While it is always sensible to investigate a company's debt, in this case Hyundai MobisLtd has ₩8.48t in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of ₩3.0t, being 98% of its EBIT. So is Hyundai MobisLtd's debt a risk? It doesn't seem so to us. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of Hyundai MobisLtd's earnings per share history for free.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.