Market Overview

A Look Into E W Scripps's Debt

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Shares of E W Scripps (NASDAQ: SSP) increased by 72.57% in the past three months. Before we understand the importance of debt, let us look at how much debt E W Scripps has.

E W Scripps's Debt

According to the E W Scripps’s most recent financial statement as reported on August 7, 2020, total debt is at $1.98 billion, with $1.95 billion in long-term debt and $26.86 million in current debt. Adjusting for $98.93 million in cash-equivalents, the company has a net debt of $1.88 billion.

To understand the degree of financial leverage a company has, investors look at the debt ratio. Considering E W Scripps’s $3.55 billion in total assets, the debt-ratio is at 0.56. As a rule of thumb, a debt-ratio more than one 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. A debt ratio of 40% 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.

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.

 

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