Over the past three months, Altria Group Inc. MON increased by 11.24%. To understand a company’s price action over a period of about 3 months, it can be helpful to look at its financials. An important aspect of a company’s finances is its debt, but before we understand the importance of debt, let’s look at how much debt Altria Group has.

Altria Group Debt

According to Altria Group’s most recent financial report, reported October 27, 2022, total debt is $26.29 billion, of which $24.85 billion is long-term debt and $1.44 billion is accrued ongoing debt. Adjusted for $2.48 billion in cash, the company has net debt of $23.81 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, shareholders look at the leverage ratio. Considering Altria Group’s total assets of $33.95 billion, the debt ratio is 0.77. 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 shareholders consider debt?

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

Interest payment obligations may affect the company’s cash flow. Shareholders can keep excess profit generated from the debt capital, …