Overseas Shipholding Group (NYSE:OSG) stock has gained by 24.65% in the last three months. Let’s take a look at how much debt Overseas Shipholding Gr has before we get into the importance of debt.
Debt of Overseas Shipholding Gr.
Long-term debt is $400.96 million, and current debt is $42.72 million, for a total debt of $443.68 million, according to Overseas Shipholding Gr’s balance sheet as of May 7, 2021. The company’s net debt is $398.58 million after accounting for $45.09 million in cash equivalents.
Let’s define some of the terminology used in the preceding paragraph. The portion of a company’s debt due within a year is called current debt, while the portion due in more than a year is called long-term debt. Cash and liquid securities with maturities of 90 days or less are considered cash equivalents. Current debt plus long-term debt minus cash equivalents equals total debt.
The debt-ratio is used by investors to determine how much financial leverage a company has. With total assets of $1.18 billion, Overseas Shipholding Gr has a debt-ratio of 0.38. A debt-to-asset ratio greater than one indicates that assets are used to fund a significant percentage of debt. If interest rates rise, the danger of defaulting on loans rises as the debt-to-income ratio rises. Varying industries have different debt-ratio tolerance criteria. A debt-to-equity ratio of 25% may be excessive in one business but normal in another.
Debt’s Importance In addition to equity, debt is an important component of a company’s capital structure and contributes to its growth. It becomes an appealing choice for executives seeking finance because it has a lower borrowing cost than stock.
Interest payments, on the other hand, can have a negative impact on a company’s cash flow. Financial leverage also allows businesses to use more money for operations, allowing equity owners to keep the excess profit earned by loan financing.
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