Is AbClon (KOSDAQ:174900) A Risky Investment?

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. We can see that AbClon Inc. (KOSDAQ:174900) does use debt in its business. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. 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. When we think about a company's use of debt, we first look at cash and debt together.

What Is AbClon's Debt?

You can click the graphic below for the historical numbers, but it shows that AbClon had ₩7.00b of debt in June 2025, down from ₩7.61b, one year before. However, its balance sheet shows it holds ₩13.6b in cash, so it actually has ₩6.65b net cash.

How Strong Is AbClon's Balance Sheet?

The latest balance sheet data shows that AbClon had liabilities of ₩8.18b due within a year, and liabilities of ₩864.2m falling due after that. On the other hand, it had cash of ₩13.6b and ₩1.53b worth of receivables due within a year. So it actually has ₩6.14b more liquid assets than total liabilities.

This surplus suggests that AbClon has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, AbClon 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 it is AbClon'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 AbClon

Over 12 months, AbClon reported revenue of ₩3.0b, which is a gain of 46%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is AbClon?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that AbClon had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of ₩15b and booked a ₩16b accounting loss. Given it only has net cash of ₩6.65b, the company may need to raise more capital if it doesn't reach break-even soon. With very solid revenue growth in the last year, AbClon may be on a path to profitability. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example AbClon has 3 warning signs (and 2 which can't be ignored) we think you should know about.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.