A look at GameStop's debt
GameStop's Inc. GME shares have fallen 17.92% in the past three months. Before looking at how big the debt is, let's take a look at the amount of GameStop's debt.
GameStop's debtBased on GameStop's balance sheet as of September 7, 2022, long-term debt is $32.10 million and current debt is $8.90 million, or a total debt of $41.00 million. After adjusting for $908.90 million in cash equivalents, the company's net debt is -$867 million.
Let's define some of the terms we used in the paragraph above. Current debt is the portion of a company's debt that is due within one year, while long-term debt is the portion due in more than one year. Cash equivalents include cash and all liquid securities with maturities of 90 days or less. Total debt equals current debt plus long-term debt minus cash equivalents.
To understand how leveraged a company is, shareholders look at the debt-to-equity ratio. Considering GameStop's $2.80 billion in total assets, the debt ratio is 0.01. Generally, a debt ratio greater than 1 indicates that a considerable part of the debt is financed by assets. A higher debt-to-equity ratio may also imply that the company could be at risk of default if interest rates were to rise. However, debt ratios vary widely from industry to industry. A debt ratio of 35% may be higher for one sector, but average for another.
Why Debt MattersIn addition to equity, debt is an important factor in a company's capital structure and contributes to its growth. Due to its lower cost of funding than equity, it becomes an attractive option for executives trying to raise capital.
Interest payment obligations can impact a company's cash flow. Equity holders can retain excess profits, generated by debt capital, when companies use debt capital for their business operations.
Looking for stocks with low leverage ratios? Check out Benzinga Pro, a market research platform that gives investors near-instant access to dozens of stock market metrics, including leverage ratio. Click here to learn more.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
GameStop's Inc. GME shares have fallen 17.92% in the past three months. Before looking at how big the debt is, let's take a look at the amount of GameStop's debt.
GameStop's debtBased on GameStop's balance sheet as of September 7, 2022, long-term debt is $32.10 million and current debt is $8.90 million, or a total debt of $41.00 million. After adjusting for $908.90 million in cash equivalents, the company's net debt is -$867 million.
Let's define some of the terms we used in the paragraph above. Current debt is the portion of a company's debt that is due within one year, while long-term debt is the portion due in more than one year. Cash equivalents include cash and all liquid securities with maturities of 90 days or less. Total debt equals current debt plus long-term debt minus cash equivalents.
To understand how leveraged a company is, shareholders look at the debt-to-equity ratio. Considering GameStop's $2.80 billion in total assets, the debt ratio is 0.01. Generally, a debt ratio greater than 1 indicates that a considerable part of the debt is financed by assets. A higher debt-to-equity ratio may also imply that the company could be at risk of default if interest rates were to rise. However, debt ratios vary widely from industry to industry. A debt ratio of 35% may be higher for one sector, but average for another.
Why Debt MattersIn addition to equity, debt is an important factor in a company's capital structure and contributes to its growth. Due to its lower cost of funding than equity, it becomes an attractive option for executives trying to raise capital.
Interest payment obligations can impact a company's cash flow. Equity holders can retain excess profits, generated by debt capital, when companies use debt capital for their business operations.
Looking for stocks with low leverage ratios? Check out Benzinga Pro, a market research platform that gives investors near-instant access to dozens of stock market metrics, including leverage ratio. Click here to learn more.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
What's Your Reaction?
