Total Debt

Total debt is the total amount of money that a company owes to creditors or lenders. It includes both short-term debt (that is due within one year) and long-term debt (that is due in more than one year). Total debt is reported on a company's balance sheet as a liability.

Examples of debt that are included in Total Debt may include bank loans, lines of credit, corporate bonds, and other forms of debt financing. It's important to note that Total Debt does not include any equity financing or other forms of financing that do not require repayment.

Investors and analysts often use Total Debt as a metric to evaluate a company's financial health and leverage, as it gives an idea of the amount of borrowing a company has taken on to finance its operations and growth. However, it's important to consider other factors such as the company's ability to generate cash flow to pay off its debt and the interest rates on the debt.

Example:

Let's consider a company that has the following debt on its balance sheet:

  • $500,000 in bank loans with a 5-year repayment term
  • $250,000 in corporate bonds with a 10-year repayment term
  • $100,000 in lines of credit with a 1-year repayment term

To calculate the company's Total Debt, you would add up all of the debt balances, regardless of their repayment term: Total Debt = $500,000 + $250,000 + $100,000 = $850,000

Therefore, in this example, the company's Total Debt is $850,000, which includes all of its outstanding debt obligations. This figure is important to monitor as it represents the amount of money that the company needs to pay back to