Is Y-Biologics (KOSDAQ:338840) Using Too Much 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.' 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. As with many other companies Y-Biologics, Inc. (KOSDAQ:338840) makes use of debt. But the real question is whether this debt is making the company risky.

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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 frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth 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 Y-Biologics's Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Y-Biologics had ₩19.0b of debt, an increase on ₩500.0m, over one year. However, its balance sheet shows it holds ₩42.3b in cash, so it actually has ₩23.3b net cash.

How Healthy Is Y-Biologics' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Y-Biologics had liabilities of ₩36.9b due within 12 months and liabilities of ₩837.9m due beyond that. Offsetting this, it had ₩42.3b in cash and ₩252.6m in receivables that were due within 12 months. So it can boast ₩4.75b more liquid assets than total liabilities.

Having regard to Y-Biologics' size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the ₩365.5b company is short on cash, but still worth keeping an eye on the balance sheet. Simply put, the fact that Y-Biologics 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 Y-Biologics 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 Y-Biologics

In the last year Y-Biologics had a loss before interest and tax, and actually shrunk its revenue by 31%, to ₩3.6b. That makes us nervous, to say the least.

So How Risky Is Y-Biologics?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that Y-Biologics had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through ₩5.9b of cash and made a loss of ₩8.7b. But the saving grace is the ₩23.3b on the balance sheet. That means it could keep spending at its current rate for more than two years. 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. 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 Y-Biologics (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.