Is Osang HealthcareLtd (KOSDAQ:036220) A Risky Investment?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that '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. We can see that Osang Healthcare Co.,Ltd (KOSDAQ:036220) does use debt in its business. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Osang HealthcareLtd's Debt?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 Osang HealthcareLtd had ₩28.0b of debt, an increase on none, over one year. On the flip side, it has ₩23.9b in cash leading to net debt of about ₩4.08b.

A Look At Osang HealthcareLtd's Liabilities

The latest balance sheet data shows that Osang HealthcareLtd had liabilities of ₩19.0b due within a year, and liabilities of ₩29.0b falling due after that. Offsetting this, it had ₩23.9b in cash and ₩43.4b in receivables that were due within 12 months. So it can boast ₩19.4b more liquid assets than total liabilities.

This short term liquidity is a sign that Osang HealthcareLtd could probably pay off its debt with ease, as its balance sheet is far from stretched. Carrying virtually no net debt, Osang HealthcareLtd has a very light debt load indeed. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Osang HealthcareLtd 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.

See our latest analysis for Osang HealthcareLtd

Over 12 months, Osang HealthcareLtd saw its revenue hold pretty steady, and it did not report positive earnings before interest and tax. While that hardly impresses, its not too bad either.

Caveat Emptor

Over the last twelve months Osang HealthcareLtd produced an earnings before interest and tax (EBIT) loss. Indeed, it lost ₩15b at the EBIT level. Looking on the brighter side, the business has adequate liquid assets, which give it time to grow and develop before its debt becomes a near-term issue. Still, we'd be more encouraged to study the business in depth if it already had some free cash flow. So it seems too risky for our taste. 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. To that end, you should be aware of the 1 warning sign we've spotted with Osang HealthcareLtd .

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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.