Interest-bearing debt

Money borrowed on which interest has to be paid

In detail

Interest-bearing debt is borrowing that carries interest: bank loans and bonds. It is read separately from payables and other liabilities that cost nothing to carry. When rates rise, so does the interest bill, so the larger the balance the more the company moves with rates. Many investors net off cash, since a large cash pile makes the real burden smaller.

Example

With $500 million of debt and $200 million of cash, net interest-bearing debt is $300 million.

Related terms

Balance sheet Equity ratio Corporate bond Debt-to-equity ratio (D/E) Net cash

Read in the app (App Store)

For learning, not investment advice. Decisions are your own.