A Look Into ReWalk Robotics's Debt

Shares of ReWalk Robotics Inc. RWLK moved higher by 17.70% in the past three months. Before having a look at the importance of debt, let's look at how much debt ReWalk Robotics has.

ReWalk Robotics's Debt

Based on ReWalk Robotics’s financial statement as of May 28, 2020, long-term debt is at $0.00 and current debt is at $5.70 million, amounting to $5.70 million in total debt. Adjusted for $16.60 million in cash-equivalents, the company's net debt is at $-10.90 million.

Investors look at the debt-ratio to understand how much financial leverage a company has. ReWalk Robotics has $25.22 million in total assets, therefore making the debt-ratio 0.23. 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 35% might be higher for one industry, whereas normal for another.

Importance of 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.

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.