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Net Debt Calculator

Enter total debt and cash & equivalents to get net debt.

How it is calculated

The formula is a single subtraction: net debt = total debt − cash and cash equivalents. Total debt means interest-bearing borrowings, such as bank loans, bonds and finance lease obligations, all in one currency; cash means cash in hand, bank balances and very liquid short-term holdings. The cash box is optional and counts as 0 if left empty, so the result then equals gross debt. Neither value may be negative, otherwise nothing is shown. When cash is larger than debt the answer is negative, which is a net cash position. The result is formatted as a US dollar amount with two decimals.

Worked example

A company owes 850000 in loans and bonds and holds 210000 in cash and equivalents. Subtract: 850000 − 210000 = 640000. The tool shows a net debt of $640,000.00. If the same company held 900000 in cash instead, the result would be negative (−50000), meaning it has more cash than debt.

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Common mistakes

  • Including restricted or trapped cash that cannot actually be used to repay debt, which makes net debt look smaller than it is.
  • Adding operating liabilities such as supplier payables to total debt; only interest-bearing borrowings belong in debt.
  • Mixing currencies or reporting dates for debt and cash.
  • Entering cash as a negative number to represent an overdraft; the tool rejects negatives, so put the overdraft in the debt figure instead.
  • Reading a negative result as an error; it simply means net cash.

Sources

About this calculator

This calculator computes net debt, total debt − cash and cash equivalents, showing the borrowing a company would still owe if it used every dollar of cash on hand to pay debt down immediately. A company can look highly leveraged on gross debt alone yet be conservatively financed once its large cash pile is netted out — or the reverse, if its "cash" is mostly restricted or tied up.

Credit analysts and M&A dealmakers rely on net debt because it feeds directly into enterprise value (EV = market cap + net debt) and into leverage ratios like net debt/EBITDA, which lenders use as a covenant to judge how much more borrowing a company can safely take on.

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Comments (1)

  • Editorial team

    Net debt on its own says little until you set it against earnings. Dividing it by yearly EBITDA gives the usual leverage multiple: net debt of 640,000 against EBITDA of 160,000 is 4.0 times, roughly four years of operating profit to clear the borrowing. This page stops at the subtraction, so do that division yourself. Do you count lease obligations in your debt figure, and how do you treat cash held abroad?

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