What does Babcock & Wilcox debt look like?
During the past three months, the actions of Babcock & Wilcox (NYSE:NB) increased by 59.37%. Before looking at the importance of debt, let’s take a look at the amount of debt Babcock & Wilcox has.
Babcock & Wilcox Debt
According to Babcock & Wilcox’s latest financial statement released on March 8, 2021, total debt stands at $ 377.32 million, with $ 377.32 million in long-term debt and $ 0.00 in current debt. Adjusted for $ 57.34 million in cash equivalents, the company has net debt of $ 319.98 million.
Let’s define some of the terms we used in the paragraph above. Short-term debt is the part of a company’s debt that is owed for less than one year, while long-term debt is the part for more than one year. Cash equivalents include cash and all liquid securities with maturity periods of 90 days or less. Total debt equals current debt plus long-term debt minus cash equivalents.
To understand a company’s degree of financial leverage, investors look at the debt ratio. Considering Babcock & Wilcox’s total assets of $ 591.79 million, the debt ratio is 0.64. Typically, a debt ratio greater than one indicates that a considerable amount of debt is financed by assets. A higher debt ratio can also mean that the company could default if interest rates were to rise. However, debt ratios vary considerably from sector to sector. A debt ratio of 40% may be higher for one industry and normal for another.
Why are investors interested in debt?
Debt is an important factor in a company’s capital structure and can help it achieve growth. Debt generally has a relatively lower cost of financing than equity, making it an attractive option for executives.
However, interest payment obligations can have a negative impact on the company’s cash flow. Having financial leverage also allows companies to use additional capital for their business operations, allowing stock owners to keep excess profits generated by debt capital.
Are you looking for stocks with a low debt ratio? Check out Benzinga Pro, a market research platform that gives investors near instant access to dozens of stock market metrics, including the debt ratio. Click here to find out more.
See more Benzinga
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.