Domino’s Pizza Inc (NYSE: DPZ) – A Look at Domino’s Pizza Debt


Over the past three months, the actions of Domino’s Pizza (NYSE: DPZ) rose 11.12%. Before we understand the importance of debt, let’s take a look at the amount of debt at Domino’s Pizza.

Domino’s Pizza Debt

According to Domino’s Pizza’s most recent balance sheet released on July 22, 2021, total debt stands at $ 4.12 billion, with $ 4.12 billion in long-term debt and $ 2.85 million in debt. current. Adjusted for $ 168.82 million in cash equivalents, the company has net debt of $ 3.95 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 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.

Investors look at the debt ratio to understand a company’s financial leverage. Domino’s Pizza has total assets of $ 1.57 billion, making the debt ratio of 2.63. 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

Besides equity, debt is an important factor in a company’s capital structure and contributes to its growth. Because of its lower cost of financing compared to equity, it becomes an attractive option for executives trying to raise capital.

However, due to interest payment obligations, a company’s cash flow can be affected. Stock owners can keep excess profits, generated by debt capital, when companies use debt capital for their business operations.

Are you looking for stocks with a low debt ratio? Check out Benzinga Pro, a market research platform that gives investors near instant access to dozens of stock market metrics, including the debt ratio. Click here to find out more.

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