Does ILWOUL GMLLtd (KOSDAQ:178780) Have A Healthy Balance Sheet?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that ILWOUL GML Co.,Ltd (KOSDAQ:178780) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

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. 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 use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does ILWOUL GMLLtd Carry?

You can click the graphic below for the historical numbers, but it shows that ILWOUL GMLLtd had ₩2.46b of debt in March 2025, down from ₩8.25b, one year before. However, its balance sheet shows it holds ₩23.6b in cash, so it actually has ₩21.1b net cash.

How Healthy Is ILWOUL GMLLtd's Balance Sheet?

We can see from the most recent balance sheet that ILWOUL GMLLtd had liabilities of ₩10.1b falling due within a year, and liabilities of ₩152.8m due beyond that. On the other hand, it had cash of ₩23.6b and ₩3.60b worth of receivables due within a year. So it can boast ₩17.0b more liquid assets than total liabilities.

This luscious liquidity implies that ILWOUL GMLLtd's balance sheet is sturdy like a giant sequoia tree. Having regard to this fact, we think its balance sheet is as strong as an ox. Succinctly put, ILWOUL GMLLtd boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for ILWOUL GMLLtd

Better yet, ILWOUL GMLLtd grew its EBIT by 1,683% last year, which is an impressive improvement. If maintained that growth will make the debt even more manageable in the years ahead. The balance sheet is clearly the area to focus on when you are analysing debt. But it is ILWOUL GMLLtd's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While ILWOUL GMLLtd 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. During the last two years, ILWOUL GMLLtd burned a lot of cash. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that ILWOUL GMLLtd has net cash of ₩21.1b, as well as more liquid assets than liabilities. And it impressed us with its EBIT growth of 1,683% over the last year. So is ILWOUL GMLLtd'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. However, not all investment risk resides within the balance sheet - far from it. To that end, you should learn about the 2 warning signs we've spotted with ILWOUL GMLLtd (including 1 which is potentially serious) .

At the end 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 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.