Does YoungWoo DSPLtd (KOSDAQ:143540) Have A Healthy Balance Sheet?

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. As with many other companies YoungWoo DSP Co.,Ltd (KOSDAQ:143540) makes use of debt. But the more important question is: how much risk is that debt creating?

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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. 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, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does YoungWoo DSPLtd Carry?

You can click the graphic below for the historical numbers, but it shows that YoungWoo DSPLtd had ₩22.8b of debt in March 2025, down from ₩25.0b, one year before. However, it does have ₩14.1b in cash offsetting this, leading to net debt of about ₩8.63b.

A Look At YoungWoo DSPLtd's Liabilities

According to the last reported balance sheet, YoungWoo DSPLtd had liabilities of ₩42.5b due within 12 months, and liabilities of ₩533.4m due beyond 12 months. Offsetting this, it had ₩14.1b in cash and ₩2.31b in receivables that were due within 12 months. So it has liabilities totalling ₩26.6b more than its cash and near-term receivables, combined.

This deficit is considerable relative to its market capitalization of ₩29.1b, so it does suggest shareholders should keep an eye on YoungWoo DSPLtd's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since YoungWoo DSPLtd 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 YoungWoo DSPLtd

In the last year YoungWoo DSPLtd wasn't profitable at an EBIT level, but managed to grow its revenue by 23%, to ₩62b. Shareholders probably have their fingers crossed that it can grow its way to profits.

Caveat Emptor

Despite the top line growth, YoungWoo DSPLtd still had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping ₩3.6b. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. We would feel better if it turned its trailing twelve month loss of ₩3.5b into a profit. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. To that end, you should learn about the 2 warning signs we've spotted with YoungWoo DSPLtd (including 1 which makes us a bit uncomfortable) .

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.

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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.