Does Jayjun Cosmetic (KRX:025620) 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. We can see that Jayjun Cosmetic Co., Ltd. (KRX:025620) does use debt in its business. 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 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, 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 Jayjun Cosmetic's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Jayjun Cosmetic had ₩5.21b of debt, an increase on ₩2.12b, over one year. However, it does have ₩12.6b in cash offsetting this, leading to net cash of ₩7.40b.

A Look At Jayjun Cosmetic's Liabilities

Zooming in on the latest balance sheet data, we can see that Jayjun Cosmetic had liabilities of ₩10.9b due within 12 months and liabilities of ₩393.0m due beyond that. Offsetting this, it had ₩12.6b in cash and ₩6.07b in receivables that were due within 12 months. So it can boast ₩7.43b more liquid assets than total liabilities.

This short term liquidity is a sign that Jayjun Cosmetic could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Jayjun Cosmetic has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But it is Jayjun Cosmetic's earnings that will influence how the balance sheet holds up in the future. 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 Jayjun Cosmetic

Over 12 months, Jayjun Cosmetic made a loss at the EBIT level, and saw its revenue drop to ₩8.9b, which is a fall of 55%. That makes us nervous, to say the least.

So How Risky Is Jayjun Cosmetic?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Jayjun Cosmetic had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₩9.4b of cash and made a loss of ₩9.0b. But at least it has ₩7.40b on the balance sheet to spend on growth, near-term. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. 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. For instance, we've identified 4 warning signs for Jayjun Cosmetic (2 are a bit concerning) you should be aware of.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.