U.S. Markets closed
  • S&P 500

    3,629.65
    -5.76 (-0.16%)
     
  • Dow 30

    29,872.47
    -173.77 (-0.58%)
     
  • Nasdaq

    12,094.40
    +57.62 (+0.48%)
     
  • Russell 2000

    1,845.02
    -8.51 (-0.46%)
     
  • Crude Oil

    45.84
    +0.13 (+0.28%)
     
  • Gold

    1,806.40
    +0.90 (+0.05%)
     
  • Silver

    23.41
    +0.04 (+0.18%)
     
  • EUR/USD

    1.1920
    +0.0024 (+0.2026%)
     
  • 10-Yr Bond

    0.8780
    -0.0040 (-0.45%)
     
  • Vix

    21.25
    -0.39 (-1.80%)
     
  • GBP/USD

    1.3384
    +0.0026 (+0.1927%)
     
  • USD/JPY

    104.3900
    -0.0900 (-0.0861%)
     
  • BTC-USD

    18,661.87
    -378.97 (-1.99%)
     
  • CMC Crypto 200

    368.46
    -2.05 (-0.55%)
     
  • FTSE 100

    6,391.09
    -41.08 (-0.64%)
     
  • Nikkei 225

    26,296.86
    +131.27 (+0.50%)
     

Visa's Debt Overview

Benzinga Insights
·2 min read

Over the past three months, shares of Visa (NYSE: V) moved higher by 2.48%. Before having a look at the importance of debt, let us look at how much debt Visa has.

Visa's Debt

Based on Visa’s financial statement as of July 31, 2020, long-term debt is at $17.88 billion and current debt is at $3.00 billion, amounting to $20.88 billion in total debt. Adjusted for $13.90 billion in cash-equivalents, the company's net debt is at $6.98 billion.

Shareholders look at the debt-ratio to understand how much financial leverage a company has. Visa has $77.88 billion in total assets, therefore making the debt-ratio 0.27. 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 average for another.

Importance Of Debt

Besides equity, debt is an important factor in the capital structure of a company, and contributes to its growth. Due to its lower financing cost compared to equity, it becomes an attractive option for executives trying to raise capital.

Interest-payment obligations can impact the cash-flow of the company. Equity owners can keep excess profit, generated from the debt capital, when companies use the debt capital for its business operations.

See more from Benzinga

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.