Financial StatementsIntermediate

Net Debt

Total borrowings minus cash and cash equivalents.

Detailed explanation

Net debt is the bridge between equity value and enterprise value in valuation.

Formula

Net debt = Total debt − Cash & equivalents

Example

Debt ₹200 cr − cash ₹50 cr = net debt ₹150 cr.

Why it matters

Shows the real debt burden after cash on hand.

Key points

  • Negative net debt means net cash.
  • Used in EV calculation.
  • Net debt ÷ EBITDA is a common leverage test.

Related terms

Enterprise ValueDebt-to-Equity Ratio

More in Financial Statements

Income StatementRevenueCost of Goods SoldGross MarginEBITDAEBIT

Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.