Net Debt

Net debt, a widely used solvency metric by financial analysts, measures the value of a company\'s debt as shown on its balance sheet minus cash and cash-equivalents. It doesn’t evidence a company’s ability to service its debt (that’s a function of cash flow) but its ability to pay off all of its debt were it obliged to do so. Companies with debt loads but with robust cash positions are likely to be better regarded than companies with lower gross debt burdens but limited cash or near-cash.