How Does NextEra Energy's Debt Look?


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Over the past three months, shares of NextEra Energy (NYSE:NEE) moved higher by 23.86%. Before we understand the importance of debt, let us look at how much debt NextEra Energy has.

NextEra Energy's Debt

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Based on NextEra Energy’s financial statement as of July 24, 2020, long-term debt is at $42.67 billion and current debt is at $4.88 billion, amounting to $47.55 billion in total debt. Adjusted for $1.01 billion in cash-equivalents, the company's net debt is at $46.54 billion.

To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering NextEra Energy’s $121.96 billion in total assets, the debt-ratio is at 0.39. As a rule of thumb, a debt-ratio more than one indicates that a considerable portion of debt is funded by assets. A higher debt-ratio can also imply that the company might be putting itself at risk for default, if interest rates were to increase. However, debt-ratios vary widely across different industries. A debt ratio of 35% might be higher for one industry and normal for another.

Why Debt Is Important

Besides equity, debt is an important factor in the capital structure of a company, and contributes to its growth. Due to its lower financing cost compared to equity, it becomes an attractive option for executives trying to raise capital.

However, due to interest-payment obligations, cash-flow of a company can be impacted. Having financial leverage also allows companies to use additional capital for business operations, allowing equity owners to retain excess profit, generated by the debt capital.


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Posted In: NewsIntraday UpdateMarketsDebt Insights