Net Debt

Net Debt

Calculated as short- and long-term interest-bearing debt minus cash (and equivalents). Because cash is applied against debt, this metric gives an overall impression of a company's debt situation.

Notes:

When investing in a company, one of the most important factors you need to consider is how much debt the company is carrying. Here are some questions to ask yourself when analyzing a company's debt: How much debt really exists? What kind of debt is it (long/short-term maturities)? What is the debt for (repay or refinance old debts)? Can the company afford the debt if it runs into financial trouble? And, finally, how does it compare to the debt levels of competing companies?

See also: Acid-Test Ratio, Cash and Cash Equivalents, Debt, Debt/Equity Ratio, Debt Ratio, Debt Service, Debt-Service Coverage Ratio - DCSR, Leverage