WideOpenWest (NYSE:WOW) stock has risen 54.11 percent in the last three months. Let’s take a look at how much debt WideOpenWest has before we get into the importance of debt.
The Debt of WideOpenWest
Long-term debt is $2.24 billion, and current debt is $42.00 million, for a total debt of $2.29 billion as of May 4, 2021, according to WideOpenWest’s financial sheet. The company’s net debt is $2.25 billion after accounting for $36.10 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 shareholders to determine how much financial leverage a company has. WideOpenWest’s total assets are $2.51 billion, resulting in a debt-to-asset ratio of 0.91. A debt-to-asset ratio greater than one indicates that assets are used to fund a significant portion of debt. If interest rates rise, the risk 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 industry but normal in another.
Why Are Shareholders Concerned About Debt?
Debt, in addition to equity, is an important component of a company’s financial structure and helps to its growth. It becomes an appealing choice for executives seeking finance because it has a lower borrowing cost than stock.
Interest payments 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.
If you’re looking for stocks with a low debt-to-equity ratio, look no further. Look into Benzinga Pro, a market research platform that gives investors near-instant access to hundreds of company measures, including the debt-to-equity ratio. To learn more, go here./n
