Market Overview

A Look Into Murphy USA's Debt

Share:

Over the past three months, shares of Murphy USA Inc. (NYSE: MUSA) increased by 22.72%. Before having a look at the importance of debt, let's look at how much debt Murphy USA has.

Murphy USA's Debt

Based on Murphy USA’s balance sheet as of April 30, 2020, long-term debt is at $987.40 million and current debt is at $51.20 million, amounting to $1.04 billion in total debt. Adjusted for $200.30 million in cash-equivalents, the company's net debt is at $838.30 million.

Investors look at the debt-ratio to understand how much financial leverage a company has. Murphy USA has $2.58 billion in total assets, therefore making the debt-ratio 0.4. Generally speaking, a debt-ratio more than 1 means that a large portion of debt is funded by assets. As the debt-ratio increases, so the does the risk of defaulting on loans, if interest rates were to increase. Different industries have different thresholds of tolerance for debt-ratios. For example, a debt ratio of 35% might be higher for one industry, whereas normal for another.

Importance of Debt

Debt is an important factor in the capital structure of a company, and can help it attain growth. Debt usually has a relatively lower financing cost than equity, which makes it an attractive option for executives.

However, interest-payment obligations can have an adverse impact on the cash-flow of the company. 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.

 

Related Articles (MUR)

View Comments and Join the Discussion!

Posted-In: Debt InsightsNews Intraday Update Markets

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com