Health Check: How Prudently Does ABL Bio (KOSDAQ:298380) Use Debt?

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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 ABL Bio Inc. (KOSDAQ:298380) makes use of debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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 thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is ABL Bio's Net Debt?

As you can see below, ABL Bio had ₩43.0b of debt, at March 2025, which is about the same as the year before. You can click the chart for greater detail. But on the other hand it also has ₩108.6b in cash, leading to a ₩65.6b net cash position.

A Look At ABL Bio's Liabilities

Zooming in on the latest balance sheet data, we can see that ABL Bio had liabilities of ₩66.1b due within 12 months and liabilities of ₩1.61b due beyond that. Offsetting these obligations, it had cash of ₩108.6b as well as receivables valued at ₩1.53b due within 12 months. So it actually has ₩42.4b more liquid assets than total liabilities.

This state of affairs indicates that ABL Bio's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it's hard to imagine that the ₩4.07t company is struggling for cash, we still think it's worth monitoring its balance sheet. Simply put, the fact that ABL Bio 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 ultimately the future profitability of the business will decide if ABL Bio can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for ABL Bio

Over 12 months, ABL Bio made a loss at the EBIT level, and saw its revenue drop to ₩28b, which is a fall of 17%. That's not what we would hope to see.

So How Risky Is ABL Bio?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that ABL Bio had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through ₩95b of cash and made a loss of ₩72b. But at least it has ₩65.6b on the balance sheet to spend on growth, near-term. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. 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. Case in point: We've spotted 1 warning sign for ABL Bio 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.