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Net debt is a financial metric used to assess a company's financial health and its ability to meet its obligations. It is calculated by subtracting a company's cash and cash equivalents from its total debt. Total debt includes all short-term and long-term borrowings, such as loans, bonds, and other debt instruments.

A company with a high net debt may be considered riskier, as it has a larger amount of outstanding obligations relative to its readily available cash. Conversely, a company with low or negative net debt (meaning it has more cash than debt) is generally viewed as financially stable.

Net debt is an important indicator for investors and creditors when evaluating a company's leverage and solvency. It helps in understanding how much financial pressure a company is under and its capacity to handle unexpected financial challenges. Comparing a company's net debt to its earnings before interest, taxes, depreciation, and amortization (EBITDA) provides a more nuanced view of its debt servicing capability. This ratio, often referred to as the net debt to EBITDA ratio, indicates how many years of earnings it would take to pay off the company's net debt.