Health Check: How Prudently Does Pangrim (KRX:003610) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Pangrim Co., Ltd. (KRX:003610) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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 step when considering a company's debt levels is to consider its cash and debt together.

What Is Pangrim's Debt?

As you can see below, at the end of June 2025, Pangrim had ₩17.5b of debt, up from ₩12.3b a year ago. Click the image for more detail. However, it does have ₩55.3b in cash offsetting this, leading to net cash of ₩37.8b.

How Strong Is Pangrim's Balance Sheet?

The latest balance sheet data shows that Pangrim had liabilities of ₩39.8b due within a year, and liabilities of ₩8.00b falling due after that. Offsetting these obligations, it had cash of ₩55.3b as well as receivables valued at ₩14.0b due within 12 months. So it can boast ₩21.5b more liquid assets than total liabilities.

This surplus suggests that Pangrim has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Pangrim boasts net cash, so it's fair to say it does not have a heavy debt load! 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 Pangrim will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for Pangrim

Over 12 months, Pangrim reported revenue of ₩118b, which is a gain of 2.8%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Pangrim?

Although Pangrim had an earnings before interest and tax (EBIT) loss over the last twelve months, it made a statutory profit of ₩2.4b. So taking that on face value, and considering the cash, we don't think its very risky in the near term. With mediocre revenue growth in the last year, we're don't find the investment opportunity particularly compelling. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for Pangrim (of which 1 is concerning!) 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.