Net Debt Excel Template
Originally published: 23/04/2018 11:59
Publication number: ELQ-44659-1
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Net Debt Excel Template

A model to calculate net debt that allows investors to see if a company is financially stable or not.

Net debt allows a company to understand how the company is doing debt-wise. It allows investors to have a closer look at where a company stands in terms of liabilities.

The liabilities of a company should not surpass the cash inflows of a company or else it would be impossible for a company to pay off its dues when the time is due.

The formula is the following:

Net Debt = (Short Term Debt + Long Term Debt) - Cash & Cash Equivalents

It is important for every investor to know if a company is financially stable or not. Therefore, to check if a company is in financial bother, they use the net debt formula. This helps them to understand the true financial stance of a company.

--> A low value indicates the company is doing well. Large debt and large cash & cash equivalents will result in a lower net value. It means the company is in great shape to pay off its debt.
--> However, a high net value indicates the company has not been doing well financially.

This helps investors to decide if they want to invest in the stock of a company or not.

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1 Net Debt Excel Template

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