Aprogen Medicines (KRX:007460) Is Carrying A Fair Bit Of Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We can see that Aprogen Medicines Inc. (KRX:007460) does use debt in its business. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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 think about a company's use of debt, we first look at cash and debt together.

What Is Aprogen Medicines's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Aprogen Medicines had ₩227.2b of debt, an increase on ₩130.6b, over one year. However, because it has a cash reserve of ₩147.9b, its net debt is less, at about ₩79.3b.

How Strong Is Aprogen Medicines' Balance Sheet?

We can see from the most recent balance sheet that Aprogen Medicines had liabilities of ₩246.3b falling due within a year, and liabilities of ₩63.2b due beyond that. Offsetting this, it had ₩147.9b in cash and ₩35.5b in receivables that were due within 12 months. So it has liabilities totalling ₩126.1b more than its cash and near-term receivables, combined.

Aprogen Medicines has a market capitalization of ₩227.9b, 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. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Aprogen Medicines will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Aprogen Medicines

Over 12 months, Aprogen Medicines made a loss at the EBIT level, and saw its revenue drop to ₩127b, which is a fall of 16%. We would much prefer see growth.

Caveat Emptor

Not only did Aprogen Medicines's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost a very considerable ₩101b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled ₩43b in negative free cash flow over the last twelve months. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for Aprogen Medicines you should know about.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.