Qualcomm Inc. (NASDAQ:QCOM) shares are up 0.21% 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 Qualcomm has.
Qualcomm Debt
According to Qualcomm’s latest balance sheet dated February 2, 2023, its total debt is $16.88 billion, of which $15.43 billion is long-term debt and $1.45 billion is current debt. Adjusted for $4.81 billion in cash, the company has net debt of $12.07 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 Qualcomm’s $50.01 billion total assets, the debt ratio is 0.34. 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.
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email address and you’ll also receive the ultimate morning update from Benzinga AND a free gift card worth $30+!
Why do investors look at debt?
Debt is an important factor in a company’s capital structure and can contribute to growth. Debt typically has relatively lower funding costs than equity, making it an attractive option for executives.
Interest payment obligations may affect the company’s cash flow. Shareholders can keep excess profits from the debt if companies use the debt for their operations.
Looking for low leverage stocks? Check out Benzinga Pro, a market research platform that gives investors near-instant access to dozens of stock metrics — including debt-to-equity ratios. Click here to learn more.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments are closed.