Taihan Cable & Solution (KRX:001440) Has A Pretty Healthy Balance Sheet

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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 Taihan Cable & Solution Co., Ltd. (KRX:001440) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

We check all companies for important risks. See what we found for Taihan Cable & Solution in our free report.

What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. 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 Taihan Cable & Solution's Net Debt?

As you can see below, at the end of December 2024, Taihan Cable & Solution had ₩441.9b of debt, up from ₩410.4b a year ago. Click the image for more detail. But it also has ₩605.3b in cash to offset that, meaning it has ₩163.4b net cash.

How Strong Is Taihan Cable & Solution's Balance Sheet?

We can see from the most recent balance sheet that Taihan Cable & Solution had liabilities of ₩920.1b falling due within a year, and liabilities of ₩226.5b due beyond that. Offsetting these obligations, it had cash of ₩605.3b as well as receivables valued at ₩490.9b due within 12 months. So it has liabilities totalling ₩50.4b more than its cash and near-term receivables, combined.

Since publicly traded Taihan Cable & Solution shares are worth a total of ₩2.32t, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Despite its noteworthy liabilities, Taihan Cable & Solution boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Taihan Cable & Solution

In addition to that, we're happy to report that Taihan Cable & Solution has boosted its EBIT by 53%, thus reducing the spectre of future debt repayments. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Taihan Cable & Solution's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Taihan Cable & Solution 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 three years, Taihan Cable & Solution 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 it is always sensible to look at a company's total liabilities, it is very reassuring that Taihan Cable & Solution has ₩163.4b in net cash. And we liked the look of last year's 53% year-on-year EBIT growth. So we don't have any problem with Taihan Cable & Solution's use of debt. 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 Taihan Cable & Solution'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.