Net Debt

A metric that shows a company's overall debt situation by netting the value of a company's liabilities and debts with its cash and other similar liquid assets.

Calculated as:
Net Debt

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?

Investment dictionary. . 2012.

Look at other dictionaries:

  • net debt — Total loans less cash balances. Dresdner Kleinwort Wasserstein financial glossary …   Financial and business terms

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  • Debt overhang — is when an organization (for example, a business, government, or family) has existing debt so great that it cannot easily borrow more money, even when that new borrowing is actually a good investment that would more than pay for itself. This… …   Wikipedia

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