Is Green Lifescience (KOSDAQ:114450) Weighed On By Its Debt Load?

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 Green Lifescience Co., Ltd. (KOSDAQ:114450) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Green Lifescience Carry?

As you can see below, Green Lifescience had ₩4.80b of debt, at March 2025, which is about the same as the year before. You can click the chart for greater detail. But it also has ₩12.5b in cash to offset that, meaning it has ₩7.71b net cash.

How Strong Is Green Lifescience's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Green Lifescience had liabilities of ₩9.29b due within 12 months and liabilities of ₩916.3m due beyond that. Offsetting these obligations, it had cash of ₩12.5b as well as receivables valued at ₩2.46b due within 12 months. So it actually has ₩4.77b more liquid assets than total liabilities.

This surplus suggests that Green Lifescience has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Green Lifescience has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Green Lifescience's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Green Lifescience

In the last year Green Lifescience had a loss before interest and tax, and actually shrunk its revenue by 7.2%, to ₩23b. We would much prefer see growth.

So How Risky Is Green Lifescience?

Although Green Lifescience had an earnings before interest and tax (EBIT) loss over the last twelve months, it generated positive free cash flow of ₩455m. So although it is loss-making, it doesn't seem to have too much near-term balance sheet risk, keeping in mind the net cash. With mediocre revenue growth in the last year, we're don't find the investment opportunity particularly compelling. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 3 warning signs for Green Lifescience (2 are potentially serious!) that you should be aware of before investing here.

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.