Market Overview

A Look Into AMN Healthcare Services Debt

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Over the past three months, shares of AMN Healthcare Services (NYSE: AMN) increased by 33.52%. Before we understand the importance of debt, let us look at how much debt AMN Healthcare Services has.

AMN Healthcare Services's Debt

Based on AMN Healthcare Services’s balance sheet as of August 10, 2020, long-term debt is at $956.11 million and current debt is at $7.81 million, amounting to $963.92 million in total debt. Adjusted for $43.07 million in cash-equivalents, the company's net debt is at $920.85 million.

To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering AMN Healthcare Services’s $2.36 billion in total assets, the debt-ratio is at 0.41. 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 normal for another.

Importance Of Debt

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, due to interest-payment obligations, cash-flow of a company can be impacted. 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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