HCA Healthcare (NYSE:HCA) stock has risen 14.18 percent in the last three months. Let’s take a look at how much debt HCA Healthcare has before we get into the importance of debt.
The Debt of HCA Healthcare
Long-term debt is $30.84 billion, while current debt is $234.00 million, totaling $31.07 billion, according to HCA Healthcare’s financial statement as of April 30, 2021. The company’s net debt is $30.04 billion after adjusting for $1.03 billion 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. The debt-to-asset ratio for HCA Healthcare is 0.66, based on its total assets of $47.28 billion. A debt-to-asset ratio greater than one shows that a significant percentage of debt is funded by assets. A larger debt-to-equity ratio could indicate that the corporation is putting itself at danger of default if interest rates rise. Debt-to-income ratios, on the other hand, vary greatly amongst industries. A debt-to-equity ratio of 40% may be excessive in one business but normal in another.
The Importance of Debt
Debt is a vital part of a company’s capital structure, and it may help it grow. Debt typically has a lower financing cost than stock, making it a more appealing alternative for CEOs.
Interest payments, on the other hand, can have a negative impact on a company’s cash flow. When corporations use loan capital for commercial operations, equity owners can keep the excess profit earned by the debt capital.
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