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What Does Fidelity National's Debt Look Like?

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Over the past three months, shares of Fidelity National Info (NYSE: FIS) moved higher by 10.35%. Before we understand the importance of debt, let us look at how much debt Fidelity National Info has.

Fidelity National Info's Debt

Based on Fidelity National Info’s balance sheet as of August 4, 2020, long-term debt is at $14.87 billion and current debt is at $4.99 billion, amounting to $19.87 billion in total debt. Adjusted for $1.18 billion in cash-equivalents, the company's net debt is at $18.68 billion.

To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering Fidelity National Info’s $82.64 billion in total assets, the debt-ratio is at 0.24. Generally speaking, a debt-ratio more than one 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. A debt ratio of 35% might be higher for one industry and average 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.

However, interest-payment obligations can have an adverse impact on 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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