How Does HCA Healthcare's Debt Look?

Over the past three months, shares of HCA Healthcare HCA increased by 11.90%. Before we understand the importance of debt, let us look at how much debt HCA Healthcare has.

HCA Healthcare's Debt

According to the HCA Healthcare's most recent financial statement as reported on November 1, 2021, total debt is at $32.30 billion, with $32.05 billion in long-term debt and $250.00 million in current debt. Adjusting for $1.03 billion in cash-equivalents, the company has a net debt of $31.27 billion.

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.

Shareholders look at the debt-ratio to understand how much financial leverage a company has. HCA Healthcare has $49.56 billion in total assets, therefore making the debt-ratio 0.65. Generally speaking, a debt-ratio more than one means that a large portion of debt is funded by assets. As the debt-ratio increases, so the does the risk of defaulting on loans, if interest rates were to increase. Different industries have different thresholds of tolerance for debt-ratios. A debt ratio of 35% might be higher for one industry and normal for another.

Why Debt Is Important

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.

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.

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