Does SK bioscienceLtd (KRX:302440) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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. Importantly, SK bioscience Co.,Ltd. (KRX:302440) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. 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. 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 step when considering a company's debt levels is to consider its cash and debt together.

What Is SK bioscienceLtd's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 SK bioscienceLtd had ₩395.9b of debt, an increase on ₩80.0b, over one year. But on the other hand it also has ₩1.10t in cash, leading to a ₩700.8b net cash position.

A Look At SK bioscienceLtd's Liabilities

According to the last reported balance sheet, SK bioscienceLtd had liabilities of ₩320.4b due within 12 months, and liabilities of ₩509.4b due beyond 12 months. On the other hand, it had cash of ₩1.10t and ₩129.4b worth of receivables due within a year. So it can boast ₩396.4b more liquid assets than total liabilities.

This surplus suggests that SK bioscienceLtd has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that SK bioscienceLtd 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 ultimately the future profitability of the business will decide if SK bioscienceLtd can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for SK bioscienceLtd

Over 12 months, SK bioscienceLtd reported revenue of ₩535b, which is a gain of 44%, 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 SK bioscienceLtd?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months SK bioscienceLtd lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of ₩216b and booked a ₩53b accounting loss. Given it only has net cash of ₩700.8b, the company may need to raise more capital if it doesn't reach break-even soon. SK bioscienceLtd's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. For riskier companies like SK bioscienceLtd I always like to keep an eye on the long term profit and revenue trends. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.

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.