Shares of Tupperware Brands Inc. (NYSE: SHEEP) has increased by 288.20% in the last three months. Before we look at how big the debt is, let’s look at how much debt Tupperware Brands has.
Debt of Tupperware Brands
According to Tupperware Brands’ most recent balance sheet released July 29, 2020, total debt is $803.60 million, with $2.10 million in long-term debt and $801.50 million in debt. current. After adjusting for $120.00 million in cash equivalents, the company has a net debt of $683.60 million.
Shareholders look at the debt ratio to understand a company’s financial leverage. Tupperware Brands has total assets of $1.19 billion, bringing the debt ratio to 0.67. Generally, a leverage ratio above 1 indicates that a considerable portion of the debt is financed by assets. A higher debt-to-equity ratio may also imply that the company could be at risk of default if interest rates were to rise. However, debt ratios vary widely from industry to industry. A debt ratio of 35% may be higher for one industry, while the average for another.
Besides equity, debt is an important factor in a company’s capital structure and contributes to its growth. Due to its lower cost of funding than equity, it becomes an attractive option for executives trying to raise capital.
However, due to interest payment obligations, a company’s cash flow may be affected. Having financial leverage also allows companies to use additional capital for business operations, allowing shareholders to retain excess profits generated by debt capital.
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