Realty Income Inc stocks O fell 7.59% over the past three months. Before we take a look at what debt means, let’s look at how much debt Realty Income has.

debt from real estate income

According to Realty Income’s most recent balance sheet, reported November 3, 2022, the total debt is $16.34 billion, with $3.03 billion in long-term debt and $13.32 billion in accrued debt ongoing debt. Adjusted for $187.75 million in cash, the company has net debt of $16.15 billion.

Let’s define some of the terms we used in the paragraph above. Current Debt is that portion of a company’s debt that falls due within one year, during Long-term liabilities is the portion due in more than 1 year. cash equivalents includes cash and all liquid securities with maturities of 90 days or less. total debt equals current liabilities plus non-current liabilities minus cash equivalents.

Shareholders look at the leverage ratio to understand how much financial leverage a company has. Realty Income has total assets of $45.89 billion which translates to a debt ratio of 0.36. In general, a debt ratio greater than 1 means that a large portion of the debt is funded by assets. As the debt ratio increases, so does the risk of default on a loan when interest rates rise. Different industries have different tolerance levels for debt ratios. A debt ratio of 35% may be higher for one industry but average for another.

meaning of debt

In addition to equity, borrowed capital is an important factor in the capital structure of a company and contributes to its growth. The lower cost of financing compared to equity makes it an attractive option for executives trying to raise capital.

However, interest payment obligations may adversely affect the Company’s cash flow. Financial leverage also allows companies to use additional capital to operate the business, allowing equity investors to retain excess profit generated by the leverage.

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