Shares of Qualcomm Inc. (NASDAQ:QCOM) decreased by 21.85% in the past three months. Before having a look at the importance of debt, let's look at how much debt Qualcomm has.

Qualcomm's Debt

According to the Qualcomm's most recent financial statement as reported on July 27, 2022, total debt is at $15.54 billion, with $13.60 billion in long-term debt and $1.95 billion in current debt. Adjusting for $2.68 billion in cash-equivalents, the company has a net debt of $12.87 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 includes 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.

However, interest-payment obligations can have an adverse impact on 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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This article was generated by Benzinga's automated content engine and reviewed by an editor.