• Net debt is calculated by subtracting a company's total cash and cash equivalents from its total short-term and long-term debt.
  • This has been a guide to Net Debt and its definition. Here we discuss the formula to calculate net debt, practical examples, uses, and interpretation.
  • Net debt = total debt - cash. Net debt is a financial liquidity metric that measures a company’s ability to pay all its debts if they were due today.
  • Net debt is metric used to measure a company’s ability to pay its obligations by comparing its total debt with its liquid assets.
  • Net debt is a financial liquidity metric used to measure a company’s ability to pay its obligations by comparing its total debt with its liquid assets.
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  • Put simply, net debt indicates the amount of debt a company owes, as shown on its balance sheet, versus its liquid assets.
  • 2. Net Debt. The net debt calculation illustrates a company’s ability to pay off all of its debts if they were to be paid today.
  • Net Debt is a liquidity measure that determines how much debt a company has on its balance sheet relative to its cash on hand.
  • The ratio of a firm's liquid assets to its total debt is known as its "Net Debt," it may be used as an indicator of the firm's financial health and solvency.