What does Natera’s debt look like?

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Over the past three months, the actions of Natera (NASDAQ: NTRA) rose 10.31%. Before we understand the importance of debt, let’s take a look at Natera’s debt amount.

Natera’s debt

According to Natera’s most recent balance sheet released on May 7, 2021, total debt stands at $ 329.52 million, with $ 279.47 million in long-term debt and $ 50.05 million in current debt. . Adjusted for $ 65.13 million in cash equivalents, the company has net debt of $ 264.40 million.

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. Natera has $ 893.51 million in total assets, making the debt ratio of 0.37. 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 35% may be higher for one industry and normal for another.

Significance of 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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