We Think Samsung SDI (KRX:006400) Has A Fair Chunk Of 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. We can see that Samsung SDI Co., Ltd. (KRX:006400) does use debt in its business. But the real question is whether this debt is making the company risky.

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What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Samsung SDI's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Samsung SDI had ₩11t of debt, an increase on ₩7.98t, over one year. However, because it has a cash reserve of ₩2.86t, its net debt is less, at about ₩8.56t.

How Strong Is Samsung SDI's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Samsung SDI had liabilities of ₩9.60t due within 12 months and liabilities of ₩9.16t due beyond that. On the other hand, it had cash of ₩2.86t and ₩3.09t worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩13t.

This deficit is considerable relative to its very significant market capitalization of ₩16t, so it does suggest shareholders should keep an eye on Samsung SDI's use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Samsung SDI's ability to maintain a healthy balance sheet going forward. 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 Samsung SDI

Over 12 months, Samsung SDI made a loss at the EBIT level, and saw its revenue drop to ₩14t, which is a fall of 29%. That makes us nervous, to say the least.

Caveat Emptor

Not only did Samsung SDI's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost ₩1.2t at the EBIT level. 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. However, it doesn't help that it burned through ₩4.2t of cash over the last year. So in short it's a really risky stock. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for Samsung SDI you should know about.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.