Does HBL (KOSDAQ:452190) Have A Healthy Balance Sheet?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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, HBL Corporation (KOSDAQ:452190) does carry debt. But is this debt a concern to shareholders?

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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. If things get really bad, the lenders can take control of the business. 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 examine debt levels, we first consider both cash and debt levels, together.

What Is HBL's Debt?

The image below, which you can click on for greater detail, shows that at June 2025 HBL had debt of ₩3.48b, up from ₩1.94b in one year. But on the other hand it also has ₩13.9b in cash, leading to a ₩10.4b net cash position.

A Look At HBL's Liabilities

The latest balance sheet data shows that HBL had liabilities of ₩5.18b due within a year, and liabilities of ₩3.33b falling due after that. Offsetting these obligations, it had cash of ₩13.9b as well as receivables valued at ₩3.17b due within 12 months. So it actually has ₩8.52b more liquid assets than total liabilities.

This short term liquidity is a sign that HBL could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that HBL has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is HBL'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.

See our latest analysis for HBL

In the last year HBL's revenue was pretty flat, and it made a negative EBIT. While that hardly impresses, its not too bad either.

So How Risky Is HBL?

Statistically speaking companies that lose money are riskier than those that make money. And in the last year HBL had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of ₩474m and booked a ₩2.1b accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of ₩10.4b. That means it could keep spending at its current rate for more than two years. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example HBL 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.