Over the past three months, Marriott Intl Inc. TO DAMAGE increased by 7.88%. Before we take a look at what debt means, let’s look at how much debt Marriott Intl has.

Marriott Intl. Debts

According to Marriott Intl’s latest financial report, reported on February 14, 2023, the total debt is $10.06 billion, with $9.38 billion in long-term debt and $684.00 million to date ongoing debt. Adjusted for $507.00 million in cash equivalents, the company has net debt of $9.56 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, investors look at the leverage ratio. Considering Marriott Intl’s total assets of $24.82 billion, the debt ratio is 0.41. 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 35% debt ratio may be higher for one industry but normal for another.

Why Debt Matters

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

However, interest payment obligations may adversely affect the Company’s cash flow. Shareholders can keep excess profits from the debt when companies use the debt for their operations.

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