MPLX Inc stocks MPLX up 7.51% over the past three months. 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 meaning of debt, let’s look at how much debt MPLX has.

MPLX Debt

According to MPLX’s most recent financial statements, reported February 23, 2023, total debt is $20.03 billion, with $18.81 billion in long-term debt and $1.23 billion in current debt Debts. Adjusted for $238.00 million in cash, the company has net debt of $19.80 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. MPLX has total assets of $35.66 billion, which translates to a debt ratio of 0.56. 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 25% 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, due to interest payment obligations, a company’s cash flow can be adversely affected. Financial leverage also allows companies to use additional capital to operate the business, thereby…