Is Vivozon Pharmaceutical (KOSDAQ:082800) Using Too Much Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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 can see that Vivozon Pharmaceutical Co., Ltd. (KOSDAQ:082800) does use debt in its business. But the real question is whether this debt is making the company risky.

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Vivozon Pharmaceutical's Debt?

The chart below, which you can click on for greater detail, shows that Vivozon Pharmaceutical had ₩37.9b in debt in June 2025; about the same as the year before. However, it also had ₩7.42b in cash, and so its net debt is ₩30.4b.

A Look At Vivozon Pharmaceutical's Liabilities

We can see from the most recent balance sheet that Vivozon Pharmaceutical had liabilities of ₩70.2b falling due within a year, and liabilities of ₩5.89b due beyond that. Offsetting these obligations, it had cash of ₩7.42b as well as receivables valued at ₩13.2b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩55.6b.

Given Vivozon Pharmaceutical has a market capitalization of ₩403.8b, it's hard to believe these liabilities pose much threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Vivozon Pharmaceutical 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.

Check out our latest analysis for Vivozon Pharmaceutical

In the last year Vivozon Pharmaceutical wasn't profitable at an EBIT level, but managed to grow its revenue by 2.1%, to ₩83b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Importantly, Vivozon Pharmaceutical had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost ₩8.1b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled ₩6.4b in negative free cash flow over the last twelve months. So to be blunt we think it is risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 1 warning sign with Vivozon Pharmaceutical , and understanding them should be part of your investment process.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.