Mobile Appliance (KOSDAQ:087260) Has A Rock Solid Balance Sheet

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Mobile Appliance, Inc. (KOSDAQ:087260) does carry debt. 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. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Mobile Appliance's Net Debt?

The image below, which you can click on for greater detail, shows that Mobile Appliance had debt of ₩5.73b at the end of September 2025, a reduction from ₩14.3b over a year. However, its balance sheet shows it holds ₩23.7b in cash, so it actually has ₩18.0b net cash.

How Healthy Is Mobile Appliance's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Mobile Appliance had liabilities of ₩12.3b due within 12 months and liabilities of ₩1.28b due beyond that. Offsetting this, it had ₩23.7b in cash and ₩11.2b in receivables that were due within 12 months. So it can boast ₩21.4b more liquid assets than total liabilities.

This excess liquidity is a great indication that Mobile Appliance's balance sheet is almost as strong as Fort Knox. On this view, lenders should feel as safe as the beloved of a black-belt karate master. Succinctly put, Mobile Appliance boasts net cash, so it's fair to say it does not have a heavy debt load!

Check out our latest analysis for Mobile Appliance

On top of that, Mobile Appliance grew its EBIT by 87% over the last twelve months, and that growth will make it easier to handle its debt. There's no doubt that we learn most about debt from the balance sheet. But it is Mobile Appliance'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.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Mobile Appliance 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. Over the last two years, Mobile Appliance actually produced more free cash flow than EBIT. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

While it is always sensible to investigate a company's debt, in this case Mobile Appliance has ₩18.0b in net cash and a decent-looking balance sheet. The cherry on top was that in converted 561% of that EBIT to free cash flow, bringing in ₩6.1b. The bottom line is that we do not find Mobile Appliance's debt levels at all concerning. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Mobile Appliance is showing 1 warning sign in our investment analysis , 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.