What is the Total Debt of a Company?

Total Debt: TL;DR

Total Debt is the sum of all the money a company owes to its creditors. It includes both short-term (due within one year) and long-term obligations such as bank loans, bonds, lease payments etc. It provides a snapshot of a company's financial obligations.

Total Debt = Short-Term Debt + Long-Term Debt

In-Depth Understanding

Digging deeper, total debt is crucial in understanding a company's financial health. It encompasses the sum of all short-term debts (also known as current liabilities), including accounts payable, accrued expenses, and any debt due within a year. It also includes long-term debts that are due beyond a year, such as bank loans, bonds, or lease obligations.

High total debt may suggest a company's heavy reliance on borrowing to finance its operations and growth. It's imperative to compare total debt with the company's income and cash flow abilities to gauge its capacity to meet these obligations.

It's also important to note that the concept of 'total debt' may vary slightly across industries due to their different financing structures and operations. But generally, it provides insight into a company's leverage and risk profile.

Real-world Examples

An Automaker - Tesla Inc.

For Tesla, total debt includes the sum of short-term obligations such as accounts payable, accrued liabilities, and current portion of long-term debt and capital leases, plus long-term obligations like long-term debt and capital lease obligations.

A Technology Company - Apple Inc.

Apple's total debt is calculated by adding its short-term debt (like commercial paper), current portion of long-term debt, and long-term liabilities (like bonds) together.

A Retail Company - Amazon Inc.

For Amazon, total debt consists of accounts payable, accrued expenses and other current liabilities, short-term debt, long-term debt, and other long-term liabilities.

Check out financial statements of companies as charts on QuarterChart.com.