Is JOONGANG ADVANCED MATERIALS (KOSDAQ:051980) Using Debt Sensibly?

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, JOONGANG ADVANCED MATERIALS Co., Ltd. (KOSDAQ:051980) does carry debt. 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. If things get really bad, the lenders can take control of the business. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does JOONGANG ADVANCED MATERIALS Carry?

You can click the graphic below for the historical numbers, but it shows that JOONGANG ADVANCED MATERIALS had ₩16.7b of debt in September 2025, down from ₩21.1b, one year before. But on the other hand it also has ₩55.5b in cash, leading to a ₩38.8b net cash position.

A Look At JOONGANG ADVANCED MATERIALS' Liabilities

We can see from the most recent balance sheet that JOONGANG ADVANCED MATERIALS had liabilities of ₩5.18b falling due within a year, and liabilities of ₩17.6b due beyond that. Offsetting this, it had ₩55.5b in cash and ₩4.33b in receivables that were due within 12 months. So it actually has ₩37.0b more liquid assets than total liabilities.

This short term liquidity is a sign that JOONGANG ADVANCED MATERIALS could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, JOONGANG ADVANCED MATERIALS boasts net cash, so it's fair to say it does not have a heavy debt load! 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 JOONGANG ADVANCED MATERIALS will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for JOONGANG ADVANCED MATERIALS

Over 12 months, JOONGANG ADVANCED MATERIALS made a loss at the EBIT level, and saw its revenue drop to ₩17b, which is a fall of 35%. That makes us nervous, to say the least.

So How Risky Is JOONGANG ADVANCED MATERIALS?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year JOONGANG ADVANCED MATERIALS had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₩5.4b of cash and made a loss of ₩9.1b. But the saving grace is the ₩38.8b on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. To that end, you should be aware of the 2 warning signs we've spotted with JOONGANG ADVANCED MATERIALS .

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.