Does Seegene (KOSDAQ:096530) Have A Healthy Balance Sheet?

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. We note that Seegene, Inc. (KOSDAQ:096530) 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?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Seegene's Debt?

The chart below, which you can click on for greater detail, shows that Seegene had ₩77.2b in debt in March 2025; about the same as the year before. However, its balance sheet shows it holds ₩562.9b in cash, so it actually has ₩485.7b net cash.

How Healthy Is Seegene's Balance Sheet?

We can see from the most recent balance sheet that Seegene had liabilities of ₩170.8b falling due within a year, and liabilities of ₩60.5b due beyond that. On the other hand, it had cash of ₩562.9b and ₩92.3b worth of receivables due within a year. So it actually has ₩423.8b more liquid assets than total liabilities.

This luscious liquidity implies that Seegene's balance sheet is sturdy like a giant sequoia tree. On this view, lenders should feel as safe as the beloved of a black-belt karate master. Simply put, the fact that Seegene has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for Seegene

Although Seegene made a loss at the EBIT level, last year, it was also good to see that it generated ₩13b in EBIT over the last twelve months. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Seegene'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. Seegene 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. Over the last year, Seegene actually produced more free cash flow than EBIT. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

While it is always sensible to investigate a company's debt, in this case Seegene has ₩485.7b in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of ₩77b, being 608% of its EBIT. So we don't think Seegene's use of debt 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 2 warning signs with Seegene , and understanding them should be part of your investment process.

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.