Is Devsisters (KOSDAQ:194480) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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, Devsisters corporation (KOSDAQ:194480) does carry debt. 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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Devsisters's Debt?

As you can see below, at the end of September 2025, Devsisters had ₩36.6b of debt, up from ₩1.76b a year ago. Click the image for more detail. However, it does have ₩107.0b in cash offsetting this, leading to net cash of ₩70.4b.

A Look At Devsisters' Liabilities

The latest balance sheet data shows that Devsisters had liabilities of ₩30.3b due within a year, and liabilities of ₩106.0b falling due after that. Offsetting this, it had ₩107.0b in cash and ₩64.8b in receivables that were due within 12 months. So it actually has ₩35.5b more liquid assets than total liabilities.

This surplus suggests that Devsisters has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Devsisters has more cash than debt is arguably a good indication that it can manage its debt safely.

View our latest analysis for Devsisters

On top of that, Devsisters grew its EBIT by 33% over the last twelve months, and that growth will make it easier to handle its debt. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Devsisters's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. While Devsisters 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, Devsisters actually produced more free cash flow than EBIT over the last two 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 Devsisters has net cash of ₩70.4b, as well as more liquid assets than liabilities. And it impressed us with free cash flow of ₩31b, being 146% of its EBIT. So we don't think Devsisters's use of debt is risky. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of Devsisters's earnings per share history for free.

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.