Daesung Holdings (KRX:016710) Has A Pretty Healthy Balance Sheet

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We note that Daesung Holdings Co., Ltd. (KRX:016710) does have debt on its balance sheet. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

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, 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 Daesung Holdings Carry?

As you can see below, Daesung Holdings had ₩170.8b of debt at March 2025, down from ₩192.1b a year prior. But it also has ₩237.6b in cash to offset that, meaning it has ₩66.8b net cash.

How Healthy Is Daesung Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Daesung Holdings had liabilities of ₩393.5b due within 12 months and liabilities of ₩268.2b due beyond that. Offsetting these obligations, it had cash of ₩237.6b as well as receivables valued at ₩276.1b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩147.9b.

This deficit is considerable relative to its market capitalization of ₩177.9b, so it does suggest shareholders should keep an eye on Daesung Holdings' use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. Despite its noteworthy liabilities, Daesung Holdings boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Daesung Holdings

In addition to that, we're happy to report that Daesung Holdings has boosted its EBIT by 48%, thus reducing the spectre of future debt repayments. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Daesung Holdings 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 Daesung Holdings 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. In the last three years, Daesung Holdings created free cash flow amounting to 16% of its EBIT, an uninspiring performance. That limp level of cash conversion undermines its ability to manage and pay down debt.

Summing Up

While Daesung Holdings does have more liabilities than liquid assets, it also has net cash of ₩66.8b. And we liked the look of last year's 48% year-on-year EBIT growth. So we don't have any problem with Daesung Holdings's use of debt. Over time, share prices tend to follow earnings per share, so if you're interested in Daesung Holdings, you may well want to click here to check an interactive graph of its earnings per share history.

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.