Shares of GSK Inc. (NYSE:GSK) decreased by 5.32% in the past three months. Before having a look at the importance of debt, let's look at how much debt GSK has.

GSK Debt

According to the GSK's most recent balance sheet as reported on March 6, 2020, total debt is at $40.48 billion, with $31.30 billion in long-term debt and $9.18 billion in current debt. Adjusting for $6.25 billion in cash-equivalents, the company has a net debt of $34.24 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.

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.

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