Market Overview

How Does Intl Flavors & Fragrances Debt Look?

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Shares of Intl Flavors & Fragrances (NYSE: IFF) fell by 8.27% in the past three months. Before having a look at the importance of debt, let us look at how much debt Intl Flavors & Fragrances has.

Intl Flavors & Fragrances's Debt

Based on Intl Flavors & Fragrances’s financial statement as of August 10, 2020, long-term debt is at $4.18 billion and current debt is at $185.20 million, amounting to $4.37 billion in total debt. Adjusted for $497.41 million in cash-equivalents, the company's net debt is at $3.87 billion.

Investors look at the debt-ratio to understand how much financial leverage a company has. Intl Flavors & Fragrances has $12.99 billion in total assets, therefore making the debt-ratio 0.34. 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 35% might be higher for one industry and normal for another.

Why Debt Is Important

Besides equity, debt is an important factor in the capital structure of a company, and contributes to its growth. Due to its lower financing cost compared to equity, it becomes an attractive option for executives trying to raise capital.

Interest-payment obligations can impact 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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