HLB TherapeuticsLtd (KOSDAQ:115450) Has Debt But No Earnings; Should You Worry?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, HLB Therapeutics Co.,Ltd. (KOSDAQ:115450) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

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. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is HLB TherapeuticsLtd's Debt?

As you can see below, at the end of March 2025, HLB TherapeuticsLtd had ₩29.3b of debt, up from ₩4.52b a year ago. Click the image for more detail. But it also has ₩29.7b in cash to offset that, meaning it has ₩339.7m net cash.

How Healthy Is HLB TherapeuticsLtd's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that HLB TherapeuticsLtd had liabilities of ₩35.6b due within 12 months and liabilities of ₩10.8b due beyond that. Offsetting these obligations, it had cash of ₩29.7b as well as receivables valued at ₩8.39b due within 12 months. So its liabilities total ₩8.39b more than the combination of its cash and short-term receivables.

Having regard to HLB TherapeuticsLtd's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the ₩685.2b company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, HLB TherapeuticsLtd boasts net cash, so it's fair to say it does not have a heavy debt load! 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 HLB TherapeuticsLtd 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.

View our latest analysis for HLB TherapeuticsLtd

In the last year HLB TherapeuticsLtd wasn't profitable at an EBIT level, but managed to grow its revenue by 2.2%, to ₩57b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is HLB TherapeuticsLtd?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months HLB TherapeuticsLtd lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of ₩13b and booked a ₩27b accounting loss. But at least it has ₩339.7m on the balance sheet to spend on growth, near-term. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. 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 - HLB TherapeuticsLtd has 1 warning sign we think you should be aware of.

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.