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華爾街日報SKC (KRX:011790) Has Debt But No Earnings; Should You Worry?
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that '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 note that SKC Co., Ltd. (KRX:011790) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?
Why Does Debt Bring Risk?
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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.
How Much Debt Does SKC Carry?
As you can see below, SKC had ₩3.52t of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail. However, it also had ₩1.07t in cash, and so its net debt is ₩2.45t.
How Healthy Is SKC's Balance Sheet?
We can see from the most recent balance sheet that SKC had liabilities of ₩2.24t falling due within a year, and liabilities of ₩2.32t due beyond that. Offsetting these obligations, it had cash of ₩1.07t as well as receivables valued at ₩282.3b due within 12 months. So its liabilities total ₩3.21t more than the combination of its cash and short-term receivables.
This is a mountain of leverage relative to its market capitalization of ₩3.54t. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if SKC can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
View our latest analysis for SKC
In the last year SKC wasn't profitable at an EBIT level, but managed to grow its revenue by 24%, to ₩1.8t. With any luck the company will be able to grow its way to profitability.
Caveat Emptor
While we can certainly appreciate SKC's revenue growth, its earnings before interest and tax (EBIT) loss is not ideal. Indeed, it lost ₩281b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled ₩850b in negative free cash flow over the last twelve months. So suffice it to say we consider the stock very risky. 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 1 warning sign we've spotted with SKC .
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.