Net debt
Net debt is a company's total interest-bearing debt minus its cash and cash equivalents — what it would still owe if it used all its cash today to pay down borrowings. It bridges enterprise value and equity value.
What it is
See it move
A company holds €120m of bonds and €30m of bank loans, €150m of interest-bearing debt in total. It also holds €45m of cash and cash equivalents. Net debt subtracts the cash from total debt: €150m − €45m = €105m, the borrowing the company would still owe if it used all its cash today to repay debt.
The formula
Variables
- Net debt (€)
- Total interest-bearing debt (€)
- Cash and cash equivalents (€)
The borrowing a company would still owe if it used all its cash today to repay debt.
Check yourself
A company reports €80 million of long-term borrowings, €15 million of short-term bank loans, and €25 million of cash and cash equivalents. What is its net debt?