Debt, Definition of

Term of the Day

net debt

A standard for analyzing the degree of debt held by a company. This takes into account not just the total amount of debt that a company owes, but how much debt it has in relation to its assets. If a company has a large amount of debt, but a large reserve of cash, it is better able to handle its debt situation than a company which has a smaller amount of debt but very limited cash or assets. This is one aspect to think about when considering investing in a company. Formula: total debts minus cash and all other liquid assets.



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