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Is Russell (KOSDAQ:217500) Weighed On By Its Debt Load?

Simply Wall St · 11/10/2025 23:03

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.' 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 note that Russell Co., Ltd. (KOSDAQ:217500) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

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 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 step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Russell Carry?

You can click the graphic below for the historical numbers, but it shows that Russell had ₩5.08b of debt in June 2025, down from ₩11.2b, one year before. However, its balance sheet shows it holds ₩24.3b in cash, so it actually has ₩19.3b net cash.

debt-equity-history-analysis
KOSDAQ:A217500 Debt to Equity History November 10th 2025

A Look At Russell's Liabilities

We can see from the most recent balance sheet that Russell had liabilities of ₩13.1b falling due within a year, and liabilities of ₩1.03b due beyond that. Offsetting this, it had ₩24.3b in cash and ₩2.55b in receivables that were due within 12 months. So it can boast ₩12.8b more liquid assets than total liabilities.

This excess liquidity suggests that Russell is taking a careful approach to debt. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Simply put, the fact that Russell has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Russell 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.

See our latest analysis for Russell

Over 12 months, Russell reported revenue of ₩36b, which is a gain of 19%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Russell?

While Russell lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow ₩1.8b. So although it is loss-making, it doesn't seem to have too much near-term balance sheet risk, keeping in mind the net cash. With mediocre revenue growth in the last year, we're don't find the investment opportunity particularly compelling. 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. For instance, we've identified 4 warning signs for Russell (1 is significant) you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.