Total debt

Category:Financial analysis
Alternative names: operating leveragetotal liabilities Total leverage Total gearing

What is Total Debt

Total debt, on a balance sheet, is the total amount of borrowed money that a company has on its balance sheet. The total debt number is sum of the current and the non current debts that the company has. From accounting perspective, the debt might be in different forms like bonds, commercials papers, credit facilities, lines of credits etc.

How to calculate Debt (formula)

The formula for calculating Long term debt is simple and it calculated aster sum of long term debts and short terms debts:

Total Debt = Long Term Debts + Short Term debts

Where current debt is segment from current liabilities and represents debt that is generally due to be paid back in less than 12 months. Long Term debt is debt that has longer than 12 months due date. Both can be found on the company balance sheet.

What is a good Debt number

Different companies in different industries can have very different debt profiles. There are some industries that are very capital intensive where having large amounts of debt is considered normal while a similar size company in different industry with the same amount of debt might be considered excessive. Debt can be used to improve and help company grow but also when excessive amount of debt is used can makes a company very risky.

Stocks with high debt to equity ratio

Name Debt to equity Marketcap Industry
AMBP Ardagh Metal Packaging SA 9.91 $2.22B Packaging & Containers
FRG Franchise Group Inc 9.87 $1.03B Personal Services
GNRS Greenrose Acquisition Corp 9.76 $4.33M Shell Companies
AMRX Amneal Pharmaceuticals Inc 9.69 $693.38M Drug Manufacturers - Specialty & Generic
PRCH Porch Group Inc 9.68 $127.16M Software - Application
EVA Enviva Partners LP 9.64 $578.39M Lumber & Wood Production
PAYO Payoneer Global Inc 9.51 $1.51B Software - Application

Why is company’s total debt important

Long term and short term debt are provided by financial institutions and banks. Companies use debt for different reasons, to finance their operations, invest in growth, to buy other businesses etc. When assessing the financial health of a given company, analysts can use different metrics to determine if the level of debt (or leverage) the company uses to fund operations is within a healthy range.

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