Boston Scientific Debt Overview

Shares of Boston Scientific Inc. (NYSE: BSX) have risen 7.76% in the past three months. Before we understand the importance of debt, let’s take a look at Boston Scientific’s debt amount.

Boston Scientific Debt

Based on Boston Scientific’s financial statements as of May 6, 2020, long-term debt stands at $ 9.33 billion and current debt at $ 1.00 billion, for a total of $ 10.34 billion. dollars. Adjusted for $ 370.00 million in cash equivalents, the company’s net debt stands at $ 9.96 billion.

Investors look at the debt ratio to understand a company’s financial leverage. Boston Scientific has total assets of $ 30.11 billion, so the debt-to-equity ratio is 0.34. Generally speaking, a debt ratio greater than 1 means that a large part of the debt is financed by assets. As the debt ratio rises, the risk of default increases if interest rates rise. Different industries have different tolerance thresholds for debt ratios. For example, a debt ratio of 25% may be higher for one industry, while it is normal for another.

Why debt matters

Debt is an important factor in a company’s capital structure and can help it achieve growth. Debt generally has a relatively lower cost of financing than equity, making it an attractive option for executives.

However, interest payment obligations can have a negative impact on the company’s cash flow. Stock owners can keep excess profits, generated by debt capital, when companies use debt capital for their business operations.

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