Amyris' Debt Overview

Shares of Amyris Inc. AMRS moved lower by 31.52% in the past three months. Before having a look at the importance of debt, let's look at how much debt Amyris has.

Amyris Debt

Based on Amyris's financial statement as of November 8, 2022, long-term debt is at $673.98 million and current debt is at $1.73 million, amounting to $675.71 million in total debt. Adjusted for $18.49 million in cash-equivalents, the company's net debt is at $657.22 million.

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, investors look at the debt ratio. Considering Amyris's $754.06 million in total assets, the debt-ratio is at 0.9. As a rule of thumb, a debt-ratio more than 1 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, but average for another.

Importance of 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.

However, interest-payment obligations can have an adverse impact on 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.