What Does WillScot Mobile Mini's Debt Look Like?

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Shares of WillScot Mobile Mini WSC fell by 5.37% in the past three months. Before we understand the importance of debt, let us look at how much debt WillScot Mobile Mini has.

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WillScot Mobile Mini's Debt

According to the WillScot Mobile Mini's most recent balance sheet as reported on November 5, 2021, total debt is at $2.62 billion, with $2.60 billion in long-term debt and $18.65 million in current debt. Adjusting for $11.32 million in cash-equivalents, the company has a net debt of $2.61 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. WillScot Mobile Mini has $5.64 billion in total assets, therefore making the debt-ratio 0.46. 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 40% might be higher for one industry and average for another.

Why Shareholders Look At 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. Having financial leverage also allows companies to use additional capital for business operations, allowing equity owners to retain excess profit, generated by the debt capital.

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