Health Check: How Prudently Does Enzychem Lifesciences (KOSDAQ:183490) Use Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. Importantly, Enzychem Lifesciences Corporation (KOSDAQ:183490) does carry debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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 Enzychem Lifesciences's Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Enzychem Lifesciences had ₩3.61b of debt, an increase on ₩3.23b, over one year. However, it does have ₩112.3b in cash offsetting this, leading to net cash of ₩108.7b.

How Strong Is Enzychem Lifesciences' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Enzychem Lifesciences had liabilities of ₩8.10b due within 12 months and liabilities of ₩9.12b due beyond that. Offsetting these obligations, it had cash of ₩112.3b as well as receivables valued at ₩16.1b due within 12 months. So it can boast ₩111.2b more liquid assets than total liabilities.

This surplus strongly suggests that Enzychem Lifesciences has a rock-solid balance sheet (and the debt is of no concern whatsoever). With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Simply put, the fact that Enzychem Lifesciences 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 you can't view debt in total isolation; since Enzychem Lifesciences 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.

See our latest analysis for Enzychem Lifesciences

In the last year Enzychem Lifesciences had a loss before interest and tax, and actually shrunk its revenue by 14%, to ₩73b. That's not what we would hope to see.

So How Risky Is Enzychem Lifesciences?

While Enzychem Lifesciences lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow ₩590m. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. There's no doubt the next few years will be crucial to how the business matures. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. We've identified 1 warning sign with Enzychem Lifesciences , and understanding them should be part of your investment process.

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.