Over the past three months, Keurig Dr. Pepper Inc. KDP down 3.90%. Before we look at what debt means, let’s look at how much debt Keurig Dr. Pepper has.

keurig dr Pepper Debt

Based on Keurig Dr. Pepper as of October 27, 2022 long-term debt is $11.56 billion and current debt is $0 for total debt of $11.56 billion. Adjusted for $925.00 million in cash equivalents, the company’s net debt is $10.64 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.

To understand a company’s level of financial leverage, investors look at the leverage ratio. Considering Keurig Dr. Pepper at $51.44 billion, the debt ratio is 0.22. As a rule of thumb, a debt ratio greater than 1 indicates that a significant portion of the debt is funded by assets. A higher leverage ratio can also mean that the company faces default risk if interest rates rise. However, leverage ratios vary widely across different industries. For example, a 40% debt ratio may be higher for one industry but normal for another.

Why Debt Matters

Debt is an important factor in a company’s capital structure and can contribute to growth. Debt typically has a relatively lower funding cost than equity, making it an attractive option for executives.

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 profits generated by the leverage.

Looking for low leverage stocks? Cash…