Market Overview

How Does CSX's Debt Look?


Shares of CSX (NASDAQ: CSX) increased by 13.77% in the past three months. Before having a look at the importance of debt, let us look at how much debt CSX has.

CSX's Debt

Based on CSX’s financial statement as of July 23, 2020, long-term debt is at $16.13 billion and current debt is at $378.00 million, amounting to $16.51 billion in total debt. Adjusted for $2.39 billion in cash-equivalents, the company's net debt is at $14.12 billion.

To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering CSX’s $38.90 billion in total assets, the debt-ratio is at 0.42. 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 25% 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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Posted-In: Debt InsightsNews Intraday Update Markets

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