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华尔街日报Is Daechang Solution (KOSDAQ:096350) Weighed On By Its Debt Load?
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. Importantly, Daechang Solution Co., Ltd. (KOSDAQ:096350) does carry debt. But is this debt a concern to shareholders?
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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. 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 examine debt levels, we first consider both cash and debt levels, together.
What Is Daechang Solution's Net Debt?
You can click the graphic below for the historical numbers, but it shows that as of September 2025 Daechang Solution had ₩69.6b of debt, an increase on ₩63.2b, over one year. However, it also had ₩16.2b in cash, and so its net debt is ₩53.4b.
How Strong Is Daechang Solution's Balance Sheet?
We can see from the most recent balance sheet that Daechang Solution had liabilities of ₩75.1b falling due within a year, and liabilities of ₩29.2b due beyond that. Offsetting these obligations, it had cash of ₩16.2b as well as receivables valued at ₩9.81b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩78.2b.
This deficit is considerable relative to its market capitalization of ₩87.1b, so it does suggest shareholders should keep an eye on Daechang Solution's use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Daechang Solution'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.
See our latest analysis for Daechang Solution
Over 12 months, Daechang Solution made a loss at the EBIT level, and saw its revenue drop to ₩60b, which is a fall of 2.4%. That's not what we would hope to see.
Caveat Emptor
Importantly, Daechang Solution had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩451m. 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. For example, we would not want to see a repeat of last year's loss of ₩9.6b. So to be blunt we do think it is 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. For instance, we've identified 2 warning signs for Daechang Solution that 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.