AMOREPACIFIC Holdings (KRX:002790) Has A Rock Solid Balance Sheet

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that AMOREPACIFIC Holdings Corp. (KRX:002790) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

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. 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, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is AMOREPACIFIC Holdings's Debt?

As you can see below, AMOREPACIFIC Holdings had ₩272.0b of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. But it also has ₩1.73t in cash to offset that, meaning it has ₩1.46t net cash.

A Look At AMOREPACIFIC Holdings' Liabilities

The latest balance sheet data shows that AMOREPACIFIC Holdings had liabilities of ₩1.09t due within a year, and liabilities of ₩396.7b falling due after that. On the other hand, it had cash of ₩1.73t and ₩353.2b worth of receivables due within a year. So it actually has ₩596.8b more liquid assets than total liabilities.

This surplus suggests that AMOREPACIFIC Holdings is using debt in a way that is appears to be both safe and conservative. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Simply put, the fact that AMOREPACIFIC Holdings has more cash than debt is arguably a good indication that it can manage its debt safely.

View our latest analysis for AMOREPACIFIC Holdings

Even more impressive was the fact that AMOREPACIFIC Holdings grew its EBIT by 136% over twelve months. If maintained that growth will make the debt even more manageable in the years ahead. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if AMOREPACIFIC Holdings can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While AMOREPACIFIC Holdings 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. Happily for any shareholders, AMOREPACIFIC Holdings actually produced more free cash flow than EBIT over the last three years. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that AMOREPACIFIC Holdings has net cash of ₩1.46t, as well as more liquid assets than liabilities. And it impressed us with free cash flow of ₩446b, being 138% of its EBIT. When it comes to AMOREPACIFIC Holdings's debt, we sufficiently relaxed that our mind turns to the jacuzzi. 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 AMOREPACIFIC Holdings you should be aware of.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.