We Think HD HYUNDAI Marine SolutionLTD (KRX:443060) Can Manage Its Debt With Ease

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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. As with many other companies HD HYUNDAI Marine Solution CO.,LTD. (KRX:443060) makes use of debt. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

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. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is HD HYUNDAI Marine SolutionLTD's Net Debt?

As you can see below, HD HYUNDAI Marine SolutionLTD had ₩2.71b of debt at June 2025, down from ₩72.0b a year prior. But on the other hand it also has ₩472.0b in cash, leading to a ₩469.3b net cash position.

How Healthy Is HD HYUNDAI Marine SolutionLTD's Balance Sheet?

We can see from the most recent balance sheet that HD HYUNDAI Marine SolutionLTD had liabilities of ₩354.8b falling due within a year, and liabilities of ₩37.1b due beyond that. Offsetting this, it had ₩472.0b in cash and ₩252.1b in receivables that were due within 12 months. So it can boast ₩332.3b more liquid assets than total liabilities.

This short term liquidity is a sign that HD HYUNDAI Marine SolutionLTD could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, HD HYUNDAI Marine SolutionLTD boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for HD HYUNDAI Marine SolutionLTD

On top of that, HD HYUNDAI Marine SolutionLTD grew its EBIT by 41% over the last twelve months, and that growth will make it easier to handle its debt. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine HD HYUNDAI Marine SolutionLTD's ability to maintain a healthy balance sheet going forward. 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. While HD HYUNDAI Marine SolutionLTD 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. Over the most recent three years, HD HYUNDAI Marine SolutionLTD recorded free cash flow worth 67% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that HD HYUNDAI Marine SolutionLTD has net cash of ₩469.3b, as well as more liquid assets than liabilities. And we liked the look of last year's 41% year-on-year EBIT growth. So is HD HYUNDAI Marine SolutionLTD's debt a risk? It doesn't seem so to us. 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 HD HYUNDAI Marine SolutionLTD's earnings per share history for free.

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.