Shares of Gilead Sciences (NASDAQ:GILD) fell by 1.76% in the past three months. Before we understand the importance of debt, let us look at how much debt Gilead Sciences has.

Gilead Sciences's Debt

According to the Gilead Sciences's most recent balance sheet as reported on November 3, 2021, total debt is at $27.69 billion, with $25.18 billion in long-term debt and $2.51 billion in current debt. Adjusting for $4.36 billion in cash-equivalents, the company has a net debt of $23.32 billion.

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 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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