Rock star Growth Puts Osang HealthcareLtd (KOSDAQ:036220) In A Position To Use 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.' 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. Importantly, Osang Healthcare Co.,Ltd (KOSDAQ:036220) does carry debt. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

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. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Osang HealthcareLtd Carry?

As you can see below, at the end of June 2025, Osang HealthcareLtd had ₩35.6b of debt, up from none a year ago. Click the image for more detail. However, because it has a cash reserve of ₩20.4b, its net debt is less, at about ₩15.2b.

A Look At Osang HealthcareLtd's Liabilities

The latest balance sheet data shows that Osang HealthcareLtd had liabilities of ₩12.2b due within a year, and liabilities of ₩35.6b falling due after that. On the other hand, it had cash of ₩20.4b and ₩47.4b worth of receivables due within a year. So it can boast ₩20.0b 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. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Osang HealthcareLtd 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.

Check out our latest analysis for Osang HealthcareLtd

In the last year Osang HealthcareLtd wasn't profitable at an EBIT level, but managed to grow its revenue by 51%, to ₩114b. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Despite the top line growth, Osang HealthcareLtd still had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩4.6b. 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. But we'd want to see some positive free cashflow before spending much time on trying to understand the stock. So it seems too risky for our taste. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 2 warning signs for Osang HealthcareLtd you should be aware of.

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.