Netovõlg

Netovõlg, or net debt in English, is a financial metric used to assess a company's overall indebtedness. It represents the total amount of debt a company owes minus any cash and cash equivalents it holds. The formula for calculating net debt is: Net Debt = Total Debt - Cash and Cash Equivalents.

This metric provides a more accurate picture of a company's financial leverage than simply looking at total debt. By subtracting liquid assets, net debt reflects the amount of debt that is not covered by readily available funds. A company with a high net debt relative to its equity or earnings might be considered to be in a riskier financial position, as it has less flexibility to meet its debt obligations.

Conversely, a company with low or negative net debt (meaning its cash and equivalents exceed its total debt) is generally considered financially strong. This indicates that the company has sufficient liquidity to cover its outstanding debts and can potentially use its excess cash for investments or shareholder returns.

Net debt is a crucial indicator for investors, creditors, and financial analysts when evaluating a company's financial health and its ability to manage its debt burden. It is often used in conjunction with other financial ratios, such as the debt-to-equity ratio, to provide a comprehensive analysis of a company's leverage. Understanding net debt is essential for making informed financial decisions.