Does YUNSUNG F&CLtd (KOSDAQ:372170) 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 YUNSUNG F&C Co.,Ltd (KOSDAQ:372170) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does YUNSUNG F&CLtd Carry?

As you can see below, at the end of June 2025, YUNSUNG F&CLtd had ₩35.4b of debt, up from ₩29.6b a year ago. Click the image for more detail. But on the other hand it also has ₩36.4b in cash, leading to a ₩982.7m net cash position.

A Look At YUNSUNG F&CLtd's Liabilities

According to the last reported balance sheet, YUNSUNG F&CLtd had liabilities of ₩95.6b due within 12 months, and liabilities of ₩5.28b due beyond 12 months. On the other hand, it had cash of ₩36.4b and ₩67.2b worth of receivables due within a year. So it can boast ₩2.66b more liquid assets than total liabilities.

This state of affairs indicates that YUNSUNG F&CLtd's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it's hard to imagine that the ₩258.5b company is struggling for cash, we still think it's worth monitoring its balance sheet. Simply put, the fact that YUNSUNG F&CLtd has more cash than debt is arguably a good indication that it can manage its debt safely.

View our latest analysis for YUNSUNG F&CLtd

In fact YUNSUNG F&CLtd's saving grace is its low debt levels, because its EBIT has tanked 78% in the last twelve months. When it comes to paying off debt, falling earnings are no more useful than sugary sodas are for your health. 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 YUNSUNG F&CLtd 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.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. YUNSUNG F&CLtd 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 last three years, YUNSUNG F&CLtd saw substantial negative free cash flow, in total. While that may be a result of expenditure for growth, it does make the debt far more risky.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that YUNSUNG F&CLtd has net cash of ₩982.7m, as well as more liquid assets than liabilities. So although we see some areas for improvement, we're not too worried about YUNSUNG F&CLtd's balance sheet. 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. For example YUNSUNG F&CLtd has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.