Over the past three months, the actions of Beyond meat (NASDAQ: BYND) fell 27.67%. Before we look at the importance of debt, let’s take a look at Beyond Meat’s debt amount.
Beyond the meat debt
Based on Beyond Meat’s financial statements as of August 12, 2021, long-term debt is $ 1.13 billion and current debt is $ 184,000, for a total debt of $ 1.13 billion. dollars. Adjusted for $ 1.01 billion in cash equivalents, the company’s net debt stands at $ 119.09 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 is owed less than a 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.
Shareholders look at the debt ratio to understand a company’s financial leverage. Beyond Meat has total assets of $ 1.47 billion, making the debt ratio of 0.77. 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.
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.
Interest payment obligations can have an impact on the company’s cash flow. Stock owners can keep excess profits, generated by debt capital, when companies use debt capital for their business operations.
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