A Look At ReWalk Robotics' Debt

Over the past three months, shares of ReWalk Robotics Inc. RWLK increased by 267.93%. Before having a look at ReWalk Robotics's balance sheet, let's look at the importance of debt.

Why Debt Is Important

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.

However, due to interest-payment obligations, cash-flow of a company can be impacted. Equity owners can keep excess profit, generated from the debt capital, when companies use the debt capital for its business operations.

ReWalk Robotics's Debt

Based on ReWalk Robotics’s financial statement as of May 28, 2020, long-term debt is at $0.00 and current debt is at $5.70 million, amounting to $5.70 million in total debt. Adjusted for $16.60 million in cash-equivalents, the company's net debt is at $-10.90 million.

Investors look at the debt-ratio to understand how much financial leverage a company has. ReWalk Robotics has $25.22 million in total assets, therefore making the debt-ratio 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. A debt ratio of 25% might be higher for one industry, whereas average for another.