net debt

Definition

A standard for analyzing the degree of debt held by a company. This takes into account not just the total amount of debt that a company owes, but how much debt it has in relation to its assets. If a company has a large amount of debt, but a large reserve of cash, it is better able to handle its debt situation than a company which has a smaller amount of debt but very limited cash or assets. This is one aspect to think about when considering investing in a company. Formula: total debts minus cash and all other liquid assets.

Use net debt in a sentence

They had a lot of net debt between them and it was hard to get out of it and move forward.

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The net debt was actually low considering the vast amount of assets the company owns, so do not let the debt metric fool you.

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The net debt of the failing business, including its assets in East Asia, totaled over $5 billion dollars, the worst in decades.

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