Is mPLUS (KOSDAQ:259630) Using Too Much Debt?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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. Importantly, mPLUS Corp. (KOSDAQ:259630) does carry debt. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

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 use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is mPLUS's Debt?

The image below, which you can click on for greater detail, shows that mPLUS had debt of ₩62.8b at the end of September 2025, a reduction from ₩93.3b over a year. However, it does have ₩104.0b in cash offsetting this, leading to net cash of ₩41.1b.

A Look At mPLUS' Liabilities

Zooming in on the latest balance sheet data, we can see that mPLUS had liabilities of ₩104.8b due within 12 months and liabilities of ₩44.9b due beyond that. On the other hand, it had cash of ₩104.0b and ₩13.8b worth of receivables due within a year. So it has liabilities totalling ₩32.0b more than its cash and near-term receivables, combined.

mPLUS has a market capitalization of ₩147.2b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. Despite its noteworthy liabilities, mPLUS boasts net cash, so it's fair to say it does not have a heavy debt load!

Check out our latest analysis for mPLUS

In addition to that, we're happy to report that mPLUS has boosted its EBIT by 93%, thus reducing the spectre of future debt repayments. The balance sheet is clearly the area to focus on when you are analysing debt. But it is mPLUS'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.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. mPLUS 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. Happily for any shareholders, mPLUS actually produced more free cash flow than EBIT over the last three years. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

Although mPLUS's balance sheet isn't particularly strong, due to the total liabilities, it is clearly positive to see that it has net cash of ₩41.1b. And it impressed us with free cash flow of ₩66b, being 183% of its EBIT. So we don't think mPLUS's use of debt is risky. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 2 warning signs for mPLUS that you should be aware of.

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.