A Look Into US Foods Debt


Over the past three months, shares of US Foods Hldg (NYSE:USFD) increased by 17.96%. Before having a look at the importance of debt, let us look at how much debt US Foods Hldg has.

US Foods Hldg's Debt

According to the US Foods Hldg’s most recent balance sheet as reported on August 4, 2020, total debt is at $6.36 billion, with $6.07 billion in long-term debt and $296.00 million in current debt. Adjusting for $1.67 billion in cash-equivalents, the company has a net debt of $4.69 billion.

Shareholders look at the debt-ratio to understand how much financial leverage a company has. US Foods Hldg has $13.53 billion in total assets, therefore making the debt-ratio 0.47. 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 35% might be higher for one industry and average for another.

Importance Of 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.

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.


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