Market Overview

How Does CSX's Debt Look?

Share:

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.

 

Related Articles (CSX)

View Comments and Join the Discussion!

Posted-In: Debt InsightsNews Intraday Update Markets

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com