Total Debt

Indicator Description

In most industries, total debt may also include the current portion of long-term debt. Since debt terms vary widely from one company to another, simply comparing outstanding debt obligations between different companies may not be adequate. It is usually meant to compare total debt amounts between companies that operate within the same sector.

Total Debt 
 = 
Bonds 
+  
Notes 

Total Debt refers to the amount of long term interest-bearing liabilities that a company carries on its balance sheet. That may include bonds sold to the public, notes written to banks or capital leases. Typically, debt can help a company magnify its earnings, but the burden of interest and principal payments will eventually prevent the firm from borrow excessively.

Total Debt In A Nutshell

If you are a value investor, you want to see a company have very minimal debt or no debt at all. In combination with that, you want the company to have lots of cash on hand so they can continue operating through the slow times, providing you with value in your investments if the company can pull through and eventually grow.

Total debt is a measurement that is important in fundamental analysis. As the title states, total debt would be all debts, such as bonds, loans, and anything the company owes money on. If a company has debt, you want to see that the debt is being used wisely and that the company is not highly leveraged, meaning if they slow down in sales, it could become an issue with repayments.

Closer Look at Total Debt

You can break debt out into a few parts to understand it better. With bonds, you want to see how much they’ve financed, the rates, and when they are due to pay back on those bonds. It could be a very small amount or many, either way, you want to see how that fits into the debt picture. Secondly, you could look at notes with lenders to see when those expire or how much the monthly payments are. This would include lines of credit, as they are similar but have their slight differences. Lastly, any short term debt should be noted because that should be going away within a year. What you do not want to see if a chain of long term debt being used to pay short term debt, which could be a vicious cycle that is indicating a cash flow issue.

Debt does not play into technical analysis much, but it could still be a factor non the less. Be sure to fully understand the intention of each debt because if it is being used to expand or grow the business, look at it as an investment because that will likely return more to you. Besides that, use common sense and if the debt pattern seems fishy, it probably is. Debt can be a powerful leveraging tool in business, but if used incorrectly, could bring a business down. There are many ratios to use as well if you are looking to compare across an industry so be sure to pay close attention to those. If you still have questions, reach out to an investing community and ask for peer input, as that can help to guide your thought process.

Other Suggestions

Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.

Investing Ideas

You can quickly originate your optimal portfoio using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Thematic Opportunities

Explore Investment Opportunities

Build portfolios using Macroaxis predefined set of investing ideas. Many of Macroaxis investing ideas can easily outperform a given market. Ideas can also be optimized per your risk profile before portfolio origination is invoked. Macroaxis thematic optimization helps investors identify companies most likely to benefit from changes or shifts in various micro-economic or local macro-level trends. Originating optimal thematic portfolios involves aligning investors' personal views, ideas, and beliefs with their actual investments.
Explore Thematic Ideas
Explore Investing Ideas  
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Other Complementary Tools

Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go