Over the past three months, shares of Amphenol Inc. aph went down 6.90%. Before taking a look at the importance of debt, let’s take a look at how much debt Amphenol has.
amphenol loan
Based on Amphenol’s balance sheet as of February 8, 2023, long-term debt is $4.58 billion and current debt is $2.70 million, for a total debt of $4.58 billion. Adjusted for cash-equivalents of $1.37 billion, the company’s net debt is $3.20 billion.
Let us define some of the terms we have used in the above paragraphs. current loan is that part of a company’s debt that is payable within 1 year, while long term debt Part payable in more than 1 year. cash equivalents Includes cash and any liquid securities with a maturity of 90 days or less. total debt Current debt is equal to long-term debt minus cash equivalents.
To understand a company’s degree of financial leverage, shareholders look at the debt ratio. Considering Amphenol’s total assets of $15.33 billion, the debt-to-equity ratio stands at 0.3. As a rule of thumb, a debt-to-equity ratio greater than 1 indicates that a large portion of the debt is financed by assets. A high debt-to-equity ratio can also mean that the company may be putting itself at risk for default if interest rates rise. However, debt ratios vary widely among different industries. For example, a debt ratio of 40% may be high for one industry, but normal for another.
Why do shareholders look at debt?
In addition to equity, debt is an important factor in a company’s capital structure, and contributes to its growth. Due to its lower funding cost compared to equity, it becomes an attractive option for executives trying to raise capital.
However, due to interest payment obligations, the company’s cash flow may be affected. Having financial leverage allows companies to access additional capital for business operations, allowing equity owners to retain additional profits generated by debt capital.
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This article was generated by Benzinga’s automated content engine and reviewed by an editor.