Doosan Fuel Cell (KRX:336260) Is Carrying A Fair Bit Of Debt

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.' 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, Doosan Fuel Cell Co., Ltd. (KRX:336260) does carry debt. But is this debt a concern to shareholders?

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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. If things get really bad, the lenders can take control of the business. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Doosan Fuel Cell's Net Debt?

As you can see below, at the end of March 2025, Doosan Fuel Cell had ₩490.2b of debt, up from ₩457.8b a year ago. Click the image for more detail. However, because it has a cash reserve of ₩114.0b, its net debt is less, at about ₩376.3b.

How Healthy Is Doosan Fuel Cell's Balance Sheet?

The latest balance sheet data shows that Doosan Fuel Cell had liabilities of ₩495.3b due within a year, and liabilities of ₩253.4b falling due after that. Offsetting these obligations, it had cash of ₩114.0b as well as receivables valued at ₩145.4b due within 12 months. So its liabilities total ₩489.4b more than the combination of its cash and short-term receivables.

This deficit isn't so bad because Doosan Fuel Cell is worth ₩1.26t, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. 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 Doosan Fuel Cell 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.

See our latest analysis for Doosan Fuel Cell

Over 12 months, Doosan Fuel Cell reported revenue of ₩480b, which is a gain of 98%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Despite the top line growth, Doosan Fuel Cell still had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost ₩11b at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. For example, we would not want to see a repeat of last year's loss of ₩16b. So we do think this stock is quite risky. When we look at a riskier company, we like to check how their profits (or losses) are trending over time. Today, we're providing readers this interactive graph showing how Doosan Fuel Cell's profit, revenue, and operating cashflow have changed over the last few years.

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.