Does TOEBOX KOREA.Ltd (KOSDAQ:215480) Have A Healthy Balance Sheet?

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.' 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 TOEBOX KOREA.Ltd. (KOSDAQ:215480) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does TOEBOX KOREA.Ltd Carry?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 TOEBOX KOREA.Ltd had ₩3.50b of debt, an increase on ₩2.50b, over one year. However, it does have ₩8.85b in cash offsetting this, leading to net cash of ₩5.35b.

How Healthy Is TOEBOX KOREA.Ltd's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that TOEBOX KOREA.Ltd had liabilities of ₩7.92b due within 12 months and liabilities of ₩183.1m due beyond that. Offsetting these obligations, it had cash of ₩8.85b as well as receivables valued at ₩2.90b due within 12 months. So it can boast ₩3.65b more liquid assets than total liabilities.

This excess liquidity suggests that TOEBOX KOREA.Ltd is taking a careful approach to debt. Due to its strong net asset position, it is not likely to face issues with its lenders. Succinctly put, TOEBOX KOREA.Ltd boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for TOEBOX KOREA.Ltd

It is just as well that TOEBOX KOREA.Ltd's load is not too heavy, because its EBIT was down 71% over the last year. Falling earnings (if the trend continues) could eventually make even modest debt quite risky. When analysing debt levels, the balance sheet is the obvious place to start. But it is TOEBOX KOREA.Ltd's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While TOEBOX KOREA.Ltd 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. Considering the last three years, TOEBOX KOREA.Ltd actually recorded a cash outflow, overall. Debt is usually more expensive, and almost always more risky in the hands of a company with negative free cash flow. Shareholders ought to hope for an improvement.

Summing Up

While it is always sensible to investigate a company's debt, in this case TOEBOX KOREA.Ltd has ₩5.35b in net cash and a decent-looking balance sheet. So we don't have any problem with TOEBOX KOREA.Ltd's use of debt. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 2 warning signs for TOEBOX KOREA.Ltd (1 is potentially serious) you should be aware of.

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.