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.' 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. We note that Legend Biotech Corporation (NASDAQ:LEGN) does have debt on its balance sheet. But is this debt a concern to shareholders?

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

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. 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. 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.

How Much Debt Does Legend Biotech Carry?

The image below, which you can click on for greater detail, shows that at March 2025 Legend Biotech had debt of US$305.7m, up from US$286.4m in one year. But on the other hand it also has US$1.01b in cash, leading to a US$699.6m net cash position.

A Look At Legend Biotech's Liabilities

We can see from the most recent balance sheet that Legend Biotech had liabilities of US$234.4m falling due within a year, and liabilities of US$363.5m due beyond that. Offsetting these obligations, it had cash of US$1.01b as well as receivables valued at US$166.8m due within 12 months. So it can boast US$574.3m more liquid assets than total liabilities.

This short term liquidity is a sign that Legend Biotech could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Legend Biotech boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Legend Biotech's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Legend Biotech

In the last year Legend Biotech wasn't profitable at an EBIT level, but managed to grow its revenue by 112%, to US$728m. So its pretty obvious shareholders are hoping for more growth!

So How Risky Is Legend Biotech?

Statistically speaking companies that lose money are riskier than those that make money. And in the last year Legend Biotech had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of US$273m and booked a US$218m accounting loss. But the saving grace is the US$699.6m on the balance sheet. That means it could keep spending at its current rate for more than two years. The good news for shareholders is that Legend Biotech has dazzling revenue growth, so there's a very good chance it can boost its free cash flow in the years to come. High growth pre-profit companies may well be risky, but they can also offer great rewards. For riskier companies like Legend Biotech I always like to keep an eye on the long term profit and revenue trends. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.

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.