Over the past three months, AT&T Inc. T rose 1.15%. Before we understand the meaning of debt, let’s look at how much debt AT&T has.

AT&T debt

Based on AT&T’s balance sheet as of August 4, 2022, long-term debt is $129.75 billion and current debt is $6.21 billion, for total debt of $135.96 billion. Adjusted for $4.02 billion in cash, the company’s net debt is $131.94 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. AT&T has total assets of $426.43 billion, which translates to a debt ratio of 0.32. 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 35% debt ratio may be higher for one industry but normal 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.

Interest payment obligations may 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 profit generated by the leverage.

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