Market Overview

Novavax's Debt Overview

Share:

Shares of Novavax Inc. (NASDAQ: NVAX) increased by 503.81% in the past three months. Before having a look at the importance of debt, let's look at how much debt Novavax has.

Novavax's Debt

Based on Novavax’s balance sheet as of May 11, 2020, long-term debt is at $320.97 million and current debt is at $2.03 million, amounting to $323.00 million in total debt. Adjusted for $179.88 million in cash-equivalents, the company's net debt is at $143.12 million.

To understand the degree of financial leverage a company has, investors look at the debt ratio. Considering Novavax’s $328.07 million in total assets, the debt-ratio is at 0.98. As a rule of thumb, a debt-ratio more than 1 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 40% might be higher for one industry, whereas average for another.

Why Investors Look At Debt?

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.

Interest-payment obligations can impact the cash-flow of the company. Equity owners can keep excess profit, generated from the debt capital, when companies use the debt capital for its business operations.

 

Related Articles (NVAX)

View Comments and Join the Discussion!

Posted-In: Debt InsightsIntraday Update Markets