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Shares of Volta Inc. VLTA<\/span> decreased by 72.86% in the past three months. When understanding a companies price change over a time period like 3 months, it could be helpful to look at its financials. One key aspect of a companies financials is its debt, but before we understand the importance of debt, let’s look at how much debt Volta has.<\/p>\n Based on Volta’s balance sheet as of November 14, 2022, long-term debt is at $12.00 million and current debt is at $16.00 million, amounting to $28.00 million in total debt. Adjusted for $15.65 million in cash-equivalents, the company’s net debt is at $12.35 million.<\/p>\n Let’s define some of the terms we used in the paragraph above. Current debt<\/strong> is the portion of a company’s debt which is due within 1 year, while long-term debt<\/strong> is the portion due in more than 1 year. Cash equivalents<\/strong> includes cash and any liquid securities with maturity periods of 90 days or less. Total debt<\/strong> equals current debt plus long-term debt minus cash equivalents.<\/p>\n To understand the degree of financial leverage a company has, shareholders look at the debt ratio. Considering Volta’s $369.67 million in total assets, the debt-ratio is at 0.08. 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 35% might be higher for one industry, but normal for another.<\/p>\n 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.<\/p>\n 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.<\/p>\n Looking for stocks with low debt-to-equity ratios? Check out Benzinga Pro, a market research platform which provides investors with near-instantaneous access to dozens of stock metrics – including debt-to-equity ratio. Click here to learn more<\/a>.<\/p>\nVolta Debt<\/h2>\n
Why Debt Is Important<\/h2>\n