Does Daewon Sanup (KOSDAQ:005710) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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 note that Daewon Sanup Co., Ltd (KOSDAQ:005710) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Daewon Sanup's Net Debt?

As you can see below, Daewon Sanup had ₩10.4b of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail. But on the other hand it also has ₩431.0b in cash, leading to a ₩420.7b net cash position.

A Look At Daewon Sanup's Liabilities

The latest balance sheet data shows that Daewon Sanup had liabilities of ₩196.5b due within a year, and liabilities of ₩12.7b falling due after that. On the other hand, it had cash of ₩431.0b and ₩143.7b worth of receivables due within a year. So it can boast ₩365.5b more liquid assets than total liabilities.

This luscious liquidity implies that Daewon Sanup's balance sheet is sturdy like a giant sequoia tree. With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Simply put, the fact that Daewon Sanup has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for Daewon Sanup

Better yet, Daewon Sanup grew its EBIT by 208% last year, which is an impressive improvement. If maintained that growth will make the debt even more manageable in the years ahead. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Daewon Sanup's earnings that will influence how the balance sheet holds up in the future. 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.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Daewon Sanup may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Happily for any shareholders, Daewon Sanup actually produced more free cash flow than EBIT over the last three years. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Summing Up

While it is always sensible to investigate a company's debt, in this case Daewon Sanup has ₩420.7b in net cash and a strong balance sheet. The cherry on top was that in converted 107% of that EBIT to free cash flow, bringing in ₩113b. The bottom line is that Daewon Sanup's use of debt is absolutely fine. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of Daewon Sanup's earnings per share history for free.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.