Here's Why OBZEN (KOSDAQ:417860) Has A Meaningful Debt Burden

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We note that OBZEN Inc. (KOSDAQ:417860) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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.

How Much Debt Does OBZEN Carry?

As you can see below, at the end of June 2025, OBZEN had ₩4.79b of debt, up from ₩2.61b a year ago. Click the image for more detail. But on the other hand it also has ₩21.5b in cash, leading to a ₩16.7b net cash position.

A Look At OBZEN's Liabilities

Zooming in on the latest balance sheet data, we can see that OBZEN had liabilities of ₩25.6b due within 12 months and liabilities of ₩7.43b due beyond that. On the other hand, it had cash of ₩21.5b and ₩7.33b worth of receivables due within a year. So it has liabilities totalling ₩4.17b more than its cash and near-term receivables, combined.

Since publicly traded OBZEN shares are worth a total of ₩68.5b, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, OBZEN also has more cash than debt, so we're pretty confident it can manage its debt safely.

Check out our latest analysis for OBZEN

We also note that OBZEN improved its EBIT from a last year's loss to a positive ₩343m. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since OBZEN 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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While OBZEN has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. During the last year, OBZEN burned a lot of cash. While that may be a result of expenditure for growth, it does make the debt far more risky.

Summing Up

We could understand if investors are concerned about OBZEN's liabilities, but we can be reassured by the fact it has has net cash of ₩16.7b. So although we see some areas for improvement, we're not too worried about OBZEN's balance sheet. 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. For example OBZEN has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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.