Is Chorokbaem Media (KOSDAQ:047820) Using Debt Sensibly?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Chorokbaem Media Co., Ltd. (KOSDAQ:047820) 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 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 frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. 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. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Chorokbaem Media Carry?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Chorokbaem Media had ₩30.4b of debt, an increase on ₩23.6b, over one year. However, its balance sheet shows it holds ₩155.9b in cash, so it actually has ₩125.5b net cash.

How Healthy Is Chorokbaem Media's Balance Sheet?

We can see from the most recent balance sheet that Chorokbaem Media had liabilities of ₩92.2b falling due within a year, and liabilities of ₩11.0b due beyond that. On the other hand, it had cash of ₩155.9b and ₩18.2b worth of receivables due within a year. So it actually has ₩70.9b more liquid assets than total liabilities.

This surplus liquidity suggests that Chorokbaem Media's balance sheet could take a hit just as well as Homer Simpson's head can take a punch. With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Simply put, the fact that Chorokbaem Media has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Chorokbaem Media 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.

View our latest analysis for Chorokbaem Media

In the last year Chorokbaem Media had a loss before interest and tax, and actually shrunk its revenue by 27%, to ₩178b. To be frank that doesn't bode well.

So How Risky Is Chorokbaem Media?

Although Chorokbaem Media had an earnings before interest and tax (EBIT) loss over the last twelve months, it generated positive free cash flow of ₩17b. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. The next few years will be important as the business matures. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. We've identified 2 warning signs with Chorokbaem Media (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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.