Net Debt
Total debt minus cash on hand — the real debt burden after accounting for cash that could pay it off right now.
In plain terms
Even with $10B of debt, if you hold $4B of cash you could pay it off any time you choose, so the real burden is closer to $6B. That $6B is net debt.
It is the "real debt" left after subtracting cash held from total debt. A company that has stockpiled cash equal to its debt has net debt of zero or negative (net cash).
What it tells you
It looks not just at the headline size of debt but at the real debt burden after accounting for cash.
Net debt at zero or negative (net cash) is read as a solid state with little debt worry — the strength to ride out a crisis or room to spend on acquisitions and returns.
Formula
net debt = total debt (short-term + long-term borrowings) − cash and cash equivalents
What high or low means
Low or negative net debt (net cash) is read as a solid balance sheet.
Large net debt means a heavier debt burden, but a strong earner can handle it, so look at repayment capacity with net-debt/EBITDA too.
Even when plenty of cash makes net debt look small, that cash may be locked overseas or earmarked for a specific use and not freely available.
Net debt is a point-in-time figure, so it can change quickly right after a big acquisition or large dividend. It is used as raw material for computing enterprise value (EV) and net-debt/EBITDA.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see Net and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.