# Net Debt

Total debt minus cash and equivalents.

## Definition

Net debt is total debt minus the cash on the balance sheet that could in principle be used to repay it. A negative net debt means the company has more cash than debt.

## Formula

Total Debt − Cash & Equivalents

## Why it matters

Net debt is what's actually owed once existing cash is netted against borrowings. It's the figure used in enterprise value, M&A pricing, and credit analysis. A company with $5B debt and $5B cash isn't really levered at all.

## How Standard Equity uses it

Used to compute enterprise value, and for net debt / EBITDA in the SE Grade's quality pillar (net cash scores full points).

## The metric

| Category | Balance Sheet |
| -------- | ------------- |
| Unit     | $M            |

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