A look at Seagate Technology’s debt
Over the past three months, the actions of Seagate technology (NASDAQ: STX) fell by nan%. Before we understand the importance of debt, let’s take a look at Seagate Technology’s debt amount.
Seagate Technology’s debt
According to Seagate Technology’s latest financial statement released on April 29, 2021, total debt stands at $ 5.14 billion, of which $ 4.90 billion is long-term debt and $ 245.00 million is current debt. . Adjusted for $ 1.21 billion in cash equivalents, the company has net debt of $ 3.93 billion.
Let’s define some of the terms we used in the paragraph above. Short-term debt is the portion of a company’s debt that matures within one year, while long-term debt is the portion over 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.
Investors look at the debt ratio to understand a company’s financial leverage. Seagate Technology has $ 8.60 billion in total assets, making the debt ratio 0.6. Generally speaking, a debt ratio greater than one means that a large part of the debt is financed by assets. As the debt ratio rises, the risk of default increases if interest rates rise. Different industries have different tolerance thresholds for debt ratios. A debt ratio of 25% may be higher for one industry and average 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, due to interest payment obligations, a company’s cash flow can be affected. 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.
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