Health Check: How Prudently Does YoungWoo DSPLtd (KOSDAQ:143540) Use Debt?

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 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 YoungWoo DSP Co.,Ltd (KOSDAQ:143540) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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.

What Is YoungWoo DSPLtd's Net Debt?

As you can see below, YoungWoo DSPLtd had ₩5.20b of debt at September 2025, down from ₩23.8b a year prior. However, its balance sheet shows it holds ₩14.7b in cash, so it actually has ₩9.51b net cash.

How Healthy Is YoungWoo DSPLtd's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that YoungWoo DSPLtd had liabilities of ₩26.4b due within 12 months and liabilities of ₩556.3m due beyond that. On the other hand, it had cash of ₩14.7b and ₩7.68b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩4.53b.

Since publicly traded YoungWoo DSPLtd shares are worth a total of ₩38.8b, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. While it does have liabilities worth noting, YoungWoo DSPLtd also has more cash than debt, so we're pretty confident it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But it is YoungWoo DSPLtd's earnings that will influence how the balance sheet holds up in the future. 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.

View our latest analysis for YoungWoo DSPLtd

Over 12 months, YoungWoo DSPLtd reported revenue of ₩67b, which is a gain of 45%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is YoungWoo DSPLtd?

Although YoungWoo DSPLtd had an earnings before interest and tax (EBIT) loss over the last twelve months, it made a statutory profit of ₩594m. So when you consider it has net cash, along with the statutory profit, the stock probably isn't as risky as it might seem, at least in the short term. The good news for YoungWoo DSPLtd shareholders is that its revenue growth is strong, making it easier to raise capital if need be. But we still think it's somewhat risky. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 2 warning signs for YoungWoo DSPLtd you should be aware of.

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.