Is GemVax&KAELLtd (KOSDAQ:082270) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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, GemVax&KAEL Co.,Ltd. (KOSDAQ:082270) does carry debt. But is this debt a concern to shareholders?

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

When Is Debt A Problem?

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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does GemVax&KAELLtd Carry?

The image below, which you can click on for greater detail, shows that at March 2025 GemVax&KAELLtd had debt of ₩73.3b, up from ₩35.2b in one year. However, it also had ₩21.6b in cash, and so its net debt is ₩51.7b.

How Strong Is GemVax&KAELLtd's Balance Sheet?

According to the last reported balance sheet, GemVax&KAELLtd had liabilities of ₩59.3b due within 12 months, and liabilities of ₩59.7b due beyond 12 months. Offsetting these obligations, it had cash of ₩21.6b as well as receivables valued at ₩7.87b due within 12 months. So its liabilities total ₩89.6b more than the combination of its cash and short-term receivables.

Of course, GemVax&KAELLtd has a market capitalization of ₩2.54t, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. The balance sheet is clearly the area to focus on when you are analysing debt. But it is GemVax&KAELLtd's earnings that will influence how the balance sheet holds up in the future. 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 GemVax&KAELLtd

Over 12 months, GemVax&KAELLtd made a loss at the EBIT level, and saw its revenue drop to ₩60b, which is a fall of 15%. That's not what we would hope to see.

Caveat Emptor

Not only did GemVax&KAELLtd's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at ₩23b. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through ₩28b of cash over the last year. So suffice it to say we do consider the stock to be risky. 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. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for GemVax&KAELLtd (of which 2 make us uncomfortable!) you should know about.

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.

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.