This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it. ![]() The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). We use two main ratios to inform us about debt levels relative to earnings. On the flip side, it has US$4.92b in cash leading to net debt of about US$152.4b. You can click the graphic below for the historical numbers, but it shows that as of June 2023 Verizon Communications had US$157.3b of debt, an increase on US$151.2b, over one year. ![]() When we examine debt levels, we first consider both cash and debt levels, together.Ĭheck out our latest analysis for Verizon Communications What Is Verizon Communications's Debt? By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. When Is Debt A Problem?ĭebt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. But the real question is whether this debt is making the company risky. ![]() ( NYSE:VZ) does have debt on its balance sheet. Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses.
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