A Look Into Imperial Oil's Debt

Over the past three months, shares of Imperial Oil Inc. IMO moved higher by 7.74%. Before having a look at the importance of debt, let's look at how much debt Imperial Oil has.

Imperial Oil Debt

According to the Imperial Oil's most recent balance sheet as reported on November 2, 2022, total debt is at $4.16 billion, with $4.04 billion in long-term debt and $122.00 million in current debt. Adjusting for $3.58 billion in cash-equivalents, the company has a net debt of $584.00 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 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.

To understand the degree of financial leverage a company has, investors look at the debt ratio. Considering Imperial Oil's $42.99 billion in total assets, the debt-ratio is at 0.1. As a rule of thumb, a debt-ratio more than 1 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 40% might be higher for one industry, but average 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. Equity owners can keep excess profit, generated from the debt capital, when companies use the debt capital for its business operations.

Looking for stocks with low debt-to-equity ratios? Check out Benzinga Pro, a market research platform which provides investors with near-instantaneous access to dozens of stock metrics - including debt-to-equity ratio. Click here to learn more.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

Market News and Data brought to you by Benzinga APIs
Posted In: NewsIntraday UpdateMarketsBZI-Debt
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...