A Look Into AT&T's Debt

Shares of AT&T Inc. T decreased by 2.56% in the past three months. Before we understand the importance of debt, let's look at how much debt AT&T has.

AT&T's Debt

Based on AT&T’s balance sheet as of August 5, 2020, long-term debt is at $153.39 billion and current debt is at $15.58 billion, amounting to $168.96 billion in total debt. Adjusted for $16.94 billion in cash-equivalents, the company's net debt is at $152.02 billion.

To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering AT&T’s $547.90 billion in total assets, the debt-ratio is at 0.31. 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 40% might be higher for one industry, whereas normal for another.

Why Debt Is Important

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. 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.

Posted In: NewsIntraday UpdateMarketsDebt Insights
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...