Does Huons Global (KOSDAQ:084110) Have A Healthy Balance Sheet?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Huons Global Co., Ltd. (KOSDAQ:084110) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

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 common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

What Is Huons Global's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Huons Global had ₩267.7b of debt, an increase on ₩249.0b, over one year. But it also has ₩289.7b in cash to offset that, meaning it has ₩22.1b net cash.

How Healthy Is Huons Global's Balance Sheet?

We can see from the most recent balance sheet that Huons Global had liabilities of ₩306.0b falling due within a year, and liabilities of ₩118.2b due beyond that. On the other hand, it had cash of ₩289.7b and ₩146.9b worth of receivables due within a year. So it actually has ₩12.4b more liquid assets than total liabilities.

Having regard to Huons Global's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the ₩712.5b company is struggling for cash, we still think it's worth monitoring its balance sheet. Simply put, the fact that Huons Global has more cash than debt is arguably a good indication that it can manage its debt safely.

View our latest analysis for Huons Global

But the bad news is that Huons Global has seen its EBIT plunge 18% in the last twelve months. We think hat kind of performance, if repeated frequently, could well lead to difficulties for the stock. 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 Huons Global will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. Huons Global may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. In the last three years, Huons Global created free cash flow amounting to 2.5% of its EBIT, an uninspiring performance. That limp level of cash conversion undermines its ability to manage and pay down debt.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Huons Global has net cash of ₩22.1b, as well as more liquid assets than liabilities. So we don't have any problem with Huons Global's use of debt. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. To that end, you should learn about the 3 warning signs we've spotted with Huons Global (including 1 which shouldn't be ignored) .

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.