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Net Debt Calculator

Net Debt Calculator

This net debt calculator helps you compute the net debt using the formula: Net debt = Short-term debt + Long-term debt – Cash and equivalents

Below is a screenshot of the net debt calculator:

Net Debt Calculator Screenshot

 

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Net Debt Calculator

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Net debt is a financial liquidity metric that measures a company’s ability to pay all its debts if they were due today. In other words, net debt compares a company’s total debt with its liquid assets. Net debt is the amount of debt that would remain after a company had paid off as much as debt as possible with its liquid assets. It is used to determine if a company can repay its obligations if they were all due today and whether the company is able to take on more debt.

 

Formula for Net Debt

Net debt = Short-term debt + Long-term debt – Cash and equivalents

Where:

  • Short-term debts are financial obligations that are due within 12 months. Common examples of short-term debt include accounts payable, short-term bank loans, lease payments, wages, and income taxes payable.
  • Long-term debts are financial obligations that are due beyond a 12-month period. Common examples of long-term debt include bonds, lease obligations, contingent obligations, notes payable, and convertible bonds.
  • Cash and cash equivalents are the most liquid assets of a company. Common examples of cash and cash equivalents include marketable securities, commercial paper, treasury bills, and bank accounts.

 

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