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Glossary · Business quality

Debt and cash

What the company owes lenders, against the cash it holds.

Why it matters

Debt is cheap fuel in good years and dangerous in bad ones. Net debt (debt minus cash) is what really has to be repaid.

How to read it

Divide debt by yearly free cash flow: the result is how many years it would take to repay.

Related

Financial healthWhether the balance sheet can survive a bad year: debt, cash and the cash flow to pay debts.Free cash flowCash from operations minus what the company spends on equipment and buildings.

In the Cluenex app, this explanation opens next to every debt and cash figure, with the live reading for the stock you are looking at. Open it in Cluenex