Over the past three months, Biogen Inc. BIIB decreased by 7.79%. Before we look at the meaning of debt, let’s look at how much debt Biogen has.

biogen debt

According to Biogen’s most recent balance sheet, reported February 15, 2023, total debt is $6.28 billion, of which $6.28 billion is long-term debt and $0 is current debt. Adjusted for $3.42 billion in cash, the company has net debt of $2.86 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. Biogen has total assets of $24.55 billion, which translates to a debt ratio of 0.26. 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. For example, a 40% debt ratio may be higher for one industry but normal for another.

Why Debt Matters

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.

Interest payment obligations may affect the company’s cash flow. Shareholders can keep excess profits from the debt if companies use the debt for their operations.

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