Over the past three months, shares of DHT Holdings (NYSE:DHT) decreased by 5.11%. Before having a look at the importance of debt, let us look at how much debt DHT Holdings has.

DHT Holdings's Debt

Based on DHT Holdings's balance sheet as of March 23, 2017, long-term debt is at $643.97 million and current debt is at $57.52 million, amounting to $701.50 million in total debt. Adjusted for $109.30 million in cash-equivalents, the company's net debt is at $592.20 million.

Let's define some of the terms we used in the paragraph above. Current debt is the portion of a company's debt which is due within 1 year, while long-term debt is the portion due in more than 1 year. Cash equivalents include cash and any liquid securities with maturity periods of 90 days or less. Total debt equals current debt plus long-term debt minus cash equivalents.

Why Shareholders Look At Debt?

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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