U.S. Markets closed
  • S&P 500

    4,471.37
    +33.11 (+0.75%)
     
  • Dow 30

    35,294.76
    +382.20 (+1.09%)
     
  • Nasdaq

    14,897.34
    +73.91 (+0.50%)
     
  • Russell 2000

    2,265.65
    -8.52 (-0.37%)
     
  • Gold

    1,768.10
    -29.80 (-1.66%)
     
  • EUR/USD

    1.1606
    +0.0005 (+0.0464%)
     
  • 10-Yr Bond

    1.5760
    +0.0570 (+3.75%)
     
  • Vix

    16.30
    -0.56 (-3.32%)
     
  • GBP/USD

    1.3751
    +0.0074 (+0.5418%)
     
  • USD/JPY

    114.2000
    +0.5230 (+0.4601%)
     
  • BTC-USD

    61,094.34
    -635.51 (-1.03%)
     
  • CMC Crypto 200

    1,464.06
    +57.32 (+4.07%)
     
  • FTSE 100

    7,234.03
    +26.32 (+0.37%)
     
  • Nikkei 225

    29,068.63
    +517.70 (+1.81%)
     

What Does Babcock & Wilcox's Debt Look Like?

  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Over the past three months, shares of Babcock & Wilcox (NYSE:BW) rose by 59.37%. Before having a look at the importance of debt, let us look at how much debt Babcock & Wilcox has.

Babcock & Wilcox's Debt

According to the Babcock & Wilcox's most recent financial statement as reported on March 8, 2021, total debt is at $377.32 million, with $377.32 million in long-term debt and $0.00 in current debt. Adjusting for $57.34 million in cash-equivalents, the company has a net debt of $319.98 million.

Let's define some of the terms we used in the paragraph above. Current debt is the portion of a company's debt which is due within 1 year, while long-term debt is the portion due in more than 1 year. Cash equivalents include cash and any liquid securities with maturity periods of 90 days or less. Total debt equals current debt plus long-term debt minus cash equivalents.

To understand the degree of financial leverage a company has, investors look at the debt ratio. Considering Babcock & Wilcox's $591.79 million in total assets, the debt-ratio is at 0.64. As a rule of thumb, a debt-ratio more than one indicates that a considerable portion of debt is funded by assets. A higher debt-ratio can also imply that the company might be putting itself at risk for default, if interest rates were to increase. However, debt-ratios vary widely across different industries. A debt ratio of 40% might be higher for one industry and normal for another.

Why Investors Look At Debt?

Debt is an important factor in the capital structure of a company, and can help it attain growth. Debt usually has a relatively lower financing cost than equity, which makes it an attractive option for executives.

However, interest-payment obligations can have an adverse impact on the cash-flow of the company. Having financial leverage also allows companies to use additional capital for business operations, allowing equity owners to retain excess profit, generated by the debt capital.

Looking for stocks with low debt-to-equity ratios? Check out Benzinga Pro, a market research platform which provides investors with near-instantaneous access to dozens of stock metrics - including debt-to-equity ratio. Click here to learn more.

What Does Babcock & Wilcox's Debt Look Like?
What Does Babcock & Wilcox's Debt Look Like?

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.