Net Debt

Net debt is a liquidity metric used to determine how well a company can pay all of its debts if they were due immediately. Net debt shows much debt a company has on its balance sheet compared to its liquid assets. Net debt shows how much cash would remain if all debts were paid off and if a company has enough liquidity to meet its debt obligations.

The formula for Net debt is:

Net debt = Short-term debt + Long-term debt – Cash and cash equivalents