Is Mezzion PharmaLtd (KOSDAQ:140410) Using Debt Sensibly?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. As with many other companies Mezzion Pharma Co.,Ltd. (KOSDAQ:140410) makes use of debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

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. 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, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Mezzion PharmaLtd's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Mezzion PharmaLtd had ₩8.72b of debt, an increase on none, over one year. But on the other hand it also has ₩37.5b in cash, leading to a ₩28.8b net cash position.

How Strong Is Mezzion PharmaLtd's Balance Sheet?

The latest balance sheet data shows that Mezzion PharmaLtd had liabilities of ₩47.0b due within a year, and liabilities of ₩907.1m falling due after that. On the other hand, it had cash of ₩37.5b and ₩1.58b worth of receivables due within a year. So it has liabilities totalling ₩8.80b more than its cash and near-term receivables, combined.

Having regard to Mezzion PharmaLtd's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the ₩1.78t company is struggling for cash, we still think it's worth monitoring its balance sheet. Despite its noteworthy liabilities, Mezzion PharmaLtd boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Mezzion PharmaLtd 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.

View our latest analysis for Mezzion PharmaLtd

In the last year Mezzion PharmaLtd had a loss before interest and tax, and actually shrunk its revenue by 61%, to ₩7.9b. That makes us nervous, to say the least.

So How Risky Is Mezzion PharmaLtd?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year Mezzion PharmaLtd had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₩30b of cash and made a loss of ₩23b. However, it has net cash of ₩28.8b, so it has a bit of time before it will need more capital. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for Mezzion PharmaLtd (of which 1 can't be ignored!) you should know about.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.