Net Debt Calculator
Calculate net debt to assess company financial position and liquidity strength
Calculate Net Debt
Accounts payable, wages, utilities, current portion of long-term debt, etc.
Bonds, long-term loans, leases, pension plans, deferred revenue
Cash, bank deposits, treasury bills, commercial papers, money market funds
Earnings before interest, taxes, depreciation, and amortization
Net Debt Analysis
Formula: Net Debt = Total Debt - Cash & Cash Equivalents
Calculation: $0 + $0 - $0 = $0
Enter EBITDA value for comprehensive debt analysis.
Financial Health Indicators
Tesla Motors Example
Financial Data (millions USD)
Cash & Equivalents: $16,065M
Current Liabilities: $18,051M
Non-Current Liabilities: $11,289M
Tesla's Business: Electric vehicles & energy
Net Debt Calculation
Total Debt = $18,051M + $11,289M = $29,340M
Net Debt = $29,340M - $16,065M
Net Debt = $13,275M
Tesla has positive net debt but strong cash position
Debt Components
Short-term Liabilities
- • Accounts payable
- • Wage payables
- • Current portion of long-term debt
- • Short-term loans
- • Accrued expenses
Long-term Liabilities
- • Bonds payable
- • Long-term bank loans
- • Lease obligations
- • Pension plans
- • Deferred tax liabilities
Cash Equivalents
- • Bank deposits
- • Treasury bills
- • Commercial papers
- • Money market funds
- • Certificates of deposit
Analysis Guidelines
Negative Net Debt
Excellent financial position. Company can pay all debt with liquid assets.
Low Net Debt (<3x EBITDA)
Healthy debt levels. Good balance between growth and risk.
Moderate Net Debt (3-5x EBITDA)
Manageable but requires monitoring. Focus on cash flow.
High Net Debt (>5x EBITDA)
Potential financial stress. Consider debt reduction strategies.
Understanding Net Debt Analysis
What is Net Debt?
Net debt represents the remaining debt after subtracting a company's most liquid assets (cash and cash equivalents) from its total debt obligations. It provides insight into the company's ability to pay off its debts using readily available funds.
Why is Net Debt Important?
- •Measures true debt burden after considering liquid assets
- •Indicates financial flexibility and liquidity position
- •Helps assess bankruptcy risk and financial stability
- •Critical for credit analysis and investment decisions
Net Debt Formula
Net Debt = Total Debt - Cash & Cash Equivalents
Total Debt = Current Liabilities + Non-Current Liabilities
Alternative: Some analysts calculate Net Financial Debt, which only includes interest-bearing debt.
Interpreting Net Debt Results
Negative Net Debt
The company has more cash than debt. This indicates excellent financial health and the ability to fund growth or weather economic downturns.
Low Positive Net Debt
Manageable debt levels with reasonable liquidity. Company maintains financial flexibility while leveraging debt for growth.
Moderate Net Debt
Higher debt burden requiring careful monitoring. Focus on cash flow generation and debt service capabilities becomes critical.
High Net Debt
Significant financial leverage that may limit flexibility. Requires immediate attention to debt reduction and cash flow improvement.
Key Financial Ratios
Net Debt to EBITDA
Measures how many years it would take to pay off debt using current earnings. Ratio <3 is generally considered healthy.
Debt Service Coverage
Indicates the company's ability to service its debt payments from operating cash flow. Minimum recommended ratio is 1.25x.
Cash Flow to Debt
Shows how operating cash flow compares to total debt burden. Higher ratios indicate better debt repayment capacity.