Is Woojin (KRX:105840) A Risky Investment?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies Woojin Inc. (KRX:105840) makes use of debt. 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 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is Woojin's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Woojin had ₩2.39b of debt, an increase on ₩752.4m, over one year. However, its balance sheet shows it holds ₩63.7b in cash, so it actually has ₩61.3b net cash.

A Look At Woojin's Liabilities

According to the last reported balance sheet, Woojin had liabilities of ₩26.8b due within 12 months, and liabilities of ₩17.6b due beyond 12 months. Offsetting this, it had ₩63.7b in cash and ₩14.2b in receivables that were due within 12 months. So it can boast ₩33.5b more liquid assets than total liabilities.

This short term liquidity is a sign that Woojin could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Woojin has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for Woojin

And we also note warmly that Woojin grew its EBIT by 12% last year, making its debt load easier to handle. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Woojin will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Woojin 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. During the last three years, Woojin produced sturdy free cash flow equating to 67% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Woojin has net cash of ₩61.3b, as well as more liquid assets than liabilities. And it impressed us with free cash flow of ₩3.5b, being 67% of its EBIT. So we don't think Woojin's use of debt is risky. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 3 warning signs for Woojin you should be aware of, and 2 of them shouldn't be ignored.

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.