Over the past three months, BCE Inc. v. Chr fell 5.78%. Before we take a look at what debt means, let’s look at how much BCE owes.

BCE Debt

Based on BCE’s balance sheet as of March 11, 2020, long-term debt is $17.29 billion and current debt is $3.17 billion for total debt of $20.46 billion. Adjusted for $111.87 million in cash, the company’s net debt is $20.35 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.

Investors look at the leverage ratio to understand how much financial leverage a company has. BCE has total assets of $46.40 billion, which translates to a debt ratio of 0.44. 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. A debt ratio of 25% may be higher for one industry but average for another.

Why do investors look at 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, due to interest payment obligations, a company’s cash flow can be adversely affected. Shareholders can keep excess profits from the debt when companies use the debt for their operations.

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