Health Check: How Prudently Does WOOJUNG BIO (KOSDAQ:215380) Use Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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 WOOJUNG BIO, Inc. (KOSDAQ:215380) does use debt in its business. But is this debt a concern to shareholders?

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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 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is WOOJUNG BIO's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 WOOJUNG BIO had ₩51.3b of debt, an increase on ₩48.3b, over one year. However, because it has a cash reserve of ₩2.45b, its net debt is less, at about ₩48.9b.

How Healthy Is WOOJUNG BIO's Balance Sheet?

We can see from the most recent balance sheet that WOOJUNG BIO had liabilities of ₩31.7b falling due within a year, and liabilities of ₩33.5b due beyond that. On the other hand, it had cash of ₩2.45b and ₩3.64b worth of receivables due within a year. So it has liabilities totalling ₩59.1b more than its cash and near-term receivables, combined.

The deficiency here weighs heavily on the ₩30.0b company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. After all, WOOJUNG BIO would likely require a major re-capitalisation if it had to pay its creditors today. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since WOOJUNG BIO 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.

See our latest analysis for WOOJUNG BIO

Over 12 months, WOOJUNG BIO made a loss at the EBIT level, and saw its revenue drop to ₩37b, which is a fall of 24%. That makes us nervous, to say the least.

Caveat Emptor

Not only did WOOJUNG BIO's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost ₩2.9b at the EBIT level. Considering that alongside the liabilities mentioned above make us nervous about the company. It would need to improve its operations quickly for us to be interested in it. Not least because it had negative free cash flow of ₩4.5b over the last twelve months. So suffice it to say we consider the stock to be risky. 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. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for WOOJUNG BIO (of which 1 doesn't sit too well with us!) you should know about.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.