A Look Into Intuit’s Debt – Intuit (NASDAQ:INTU)

Over the past three months, Intuit Inc. (NASDAQ:INTU) stock has increased 1.08%. To understand how a company’s price changes over a period of time, such as three months, it can be helpful to look at its financials. One of the key aspects of a company’s finances is debt, but before we understand how important debt is, let’s take a look at how much debt Intuit has.

intuitive debt

Intuit’s latest balance sheet, reported May 23, 2023, shows total liabilities of $6.61 billion, including long-term liabilities of $6.11 billion and current liabilities of $501 million. there is Adjusting for cash equivalents of $3.75 billion, the company’s net debt is $2.87 billion.

Let’s define some of the terms used in the paragraph above. current debt is the portion of the company’s debt that is due within one year. long term debt The portion that is paid for over a year. cash equivalent Includes cash and liquid securities with a maturity of 90 days or less. total debt Equal to current debt plus long-term debt minus cash equivalents.

To understand the extent of a company’s financial leverage, shareholders look to the debt ratio. Considering Intuit’s total assets of $28.92 billion, the debt ratio is 0.23. As a rule of thumb, a debt-to-equity ratio greater than 1 indicates that a significant portion of the debt is covered by assets. A high debt ratio could also imply that the company could be exposed to the risk of default if interest rates rise. However, debt ratios vary greatly by industry. For example, a debt ratio of 40% may be high in one industry, but normal in another.

why debt matters

Debt is an important factor in a company’s capital structure and drives company growth. Debt typically has relatively lower funding costs than equity, making it an attractive option for managers.

Interest payment obligations can affect a company’s cash flow. Having financial leverage also allows a company to use additional capital to operate its business and allows stockholders to retain the excess earnings generated by the debt capital.

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This article was generated by Benzinga’s automated content engine and reviewed by editors.