Market Overview

United States Steel's Debt Overview

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Shares of United States Steel Inc. (NYSE: X) moved higher by 9.07% in the past three months. Before having a look at the importance of debt, let's look at how much debt United States Steel has.

United States Steel's Debt

According to the United States Steel’s most recent balance sheet as reported on July 31, 2020, total debt is at $5.66 billion, with $5.50 billion in long-term debt and $154.00 million in current debt. Adjusting for $2.30 billion in cash-equivalents, the company has a net debt of $3.36 billion.

Shareholders look at the debt-ratio to understand how much financial leverage a company has. United States Steel has $12.55 billion in total assets, therefore making the debt-ratio 0.45. 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. For example, a debt ratio of 25% might be higher for one industry, whereas normal for another.

Why Shareholders Look At 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.

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.

 

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