Intel's Debt Overview

Shares of Intel's Inc. INTC decreased by 12.41% in the past three months. Before we understand the importance of debt, let's look at how much debt Intel's has.

Intel's Debt

According to the Intel's's most recent balance sheet as reported on October 28, 2022, total debt is at $39.52 billion, with $37.24 billion in long-term debt and $2.28 billion in current debt. Adjusting for $4.53 billion in cash-equivalents, the company has a net debt of $34.99 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 includes 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.

To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering Intel's's $174.84 billion in total assets, the debt-ratio is at 0.23. Generally speaking, a debt-ratio more than 1 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. For example, a debt ratio of 25% might be higher for one industry, but 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. 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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This article was generated by Benzinga's automated content engine and reviewed by an editor.