What Does Core & Main's Debt Look Like?

Shares of Core & Main CNM moved higher by 3.69% in the past three months. Before having a look at the importance of debt, let us look at how much debt Core & Main has.

Core & Main's Debt

Based on Core & Main's balance sheet as of December 7, 2021, long-term debt is at $1.46 billion and current debt is at $15.00 million, amounting to $1.47 billion in total debt. Adjusted for $4.90 million in cash-equivalents, the company's net debt is at $1.47 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.

To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering Core & Main's $4.38 billion in total assets, the debt-ratio is at 0.34. As a rule of thumb, a debt-ratio more than one indicates that a considerable portion of debt is funded by assets. A higher debt-ratio can also imply that the company might be putting itself at risk for default, if interest rates were to increase. However, debt-ratios vary widely across different industries. A debt ratio of 40% might be higher for one industry and normal for another.

Why Shareholders Look At Debt?

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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