Is AptaBio Therapeutics (KOSDAQ:293780) Weighed On By Its Debt Load?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 can see that AptaBio Therapeutics Inc. (KOSDAQ:293780) does use debt in its business. But is this debt a concern to shareholders?

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Why Does Debt Bring Risk?

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. 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, 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is AptaBio Therapeutics's Net Debt?

The image below, which you can click on for greater detail, shows that AptaBio Therapeutics had debt of ₩7.73b at the end of March 2025, a reduction from ₩14.5b over a year. But it also has ₩24.9b in cash to offset that, meaning it has ₩17.2b net cash.

How Strong Is AptaBio Therapeutics' Balance Sheet?

The latest balance sheet data shows that AptaBio Therapeutics had liabilities of ₩16.4b due within a year, and liabilities of ₩3.79b falling due after that. Offsetting these obligations, it had cash of ₩24.9b as well as receivables valued at ₩1.49b due within 12 months. So it can boast ₩6.22b more liquid assets than total liabilities.

This surplus suggests that AptaBio Therapeutics has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that AptaBio Therapeutics has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since AptaBio Therapeutics 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.

Check out our latest analysis for AptaBio Therapeutics

Over 12 months, AptaBio Therapeutics reported revenue of ₩3.1b, which is a gain of 230%, although it did not report any earnings before interest and tax. That's virtually the hole-in-one of revenue growth!

So How Risky Is AptaBio Therapeutics?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months AptaBio Therapeutics lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of ₩17b and booked a ₩28b accounting loss. However, it has net cash of ₩17.2b, so it has a bit of time before it will need more capital. Importantly, AptaBio Therapeutics's revenue growth is hot to trot. High growth pre-profit companies may well be risky, but they can also offer great rewards. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 2 warning signs for AptaBio Therapeutics that you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.