Does Icure Pharmaceutical Incorporation (KOSDAQ:175250) Have A Healthy Balance Sheet?

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 might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Icure Pharmaceutical Incorporation (KOSDAQ:175250) does carry debt. But the real question is whether this debt is making the company risky.

When Is Debt A Problem?

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. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. 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.

View our latest analysis for Icure Pharmaceutical Incorporation

How Much Debt Does Icure Pharmaceutical Incorporation Carry?

As you can see below, Icure Pharmaceutical Incorporation had ₩35.0b of debt at September 2024, down from ₩75.5b a year prior. However, it also had ₩22.5b in cash, and so its net debt is ₩12.5b.

How Strong Is Icure Pharmaceutical Incorporation's Balance Sheet?

We can see from the most recent balance sheet that Icure Pharmaceutical Incorporation had liabilities of ₩54.2b falling due within a year, and liabilities of ₩9.08b due beyond that. Offsetting this, it had ₩22.5b in cash and ₩10.5b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩30.3b.

While this might seem like a lot, it is not so bad since Icure Pharmaceutical Incorporation has a market capitalization of ₩62.0b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Icure Pharmaceutical Incorporation 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.

Over 12 months, Icure Pharmaceutical Incorporation 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 Icure Pharmaceutical Incorporation produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping ₩27b. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled ₩19b in negative free cash flow over the last twelve months. So suffice it to say we consider the stock very risky. 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 3 warning signs for Icure Pharmaceutical Incorporation you should be aware of.

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.