Does Mobidays (KOSDAQ:363260) Have A Healthy Balance Sheet?

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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. We note that Mobidays Inc. (KOSDAQ:363260) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free 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. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Mobidays's Debt?

You can click the graphic below for the historical numbers, but it shows that Mobidays had ₩15.8b of debt in March 2025, down from ₩17.2b, one year before. But it also has ₩19.4b in cash to offset that, meaning it has ₩3.59b net cash.

A Look At Mobidays' Liabilities

Zooming in on the latest balance sheet data, we can see that Mobidays had liabilities of ₩81.0b due within 12 months and liabilities of ₩810.1m due beyond that. Offsetting this, it had ₩19.4b in cash and ₩59.6b in receivables that were due within 12 months. So it has liabilities totalling ₩2.80b more than its cash and near-term receivables, combined.

Of course, Mobidays has a market capitalization of ₩58.3b, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Despite its noteworthy liabilities, Mobidays boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Mobidays

Notably, Mobidays made a loss at the EBIT level, last year, but improved that to positive EBIT of ₩1.4b in the last twelve months. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Mobidays 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.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Mobidays 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. Over the most recent year, Mobidays recorded free cash flow worth 73% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While it is always sensible to look at a company's total liabilities, it is very reassuring that Mobidays has ₩3.59b in net cash. The cherry on top was that in converted 73% of that EBIT to free cash flow, bringing in ₩1.0b. So we don't have any problem with Mobidays's use of debt. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 2 warning signs for Mobidays you should be aware of, and 1 of them makes us a bit uncomfortable.

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.