Definition:

Total Debt (excl. Lease Obligations) refers to the sum of all interest-bearing liabilities a company has, excluding any lease obligations. This typically includes short-term and long-term borrowings such as bank loans, bonds, and other forms of debt financing.

Examples

Examples of Total Debt (excl. Lease Obligations) include a company's outstanding bank loans, corporate bonds issued, and any other forms of borrowed money that require interest payments, excluding any liabilities related to leasing agreements.

Formula:

Total Debt (excl. Lease Obligations) = Short-term Debt + Long-term Debt - Lease Obligations

How to use the metric:

This metric is used to assess a company's financial leverage and risk by evaluating the amount of debt it holds, excluding lease obligations. It helps investors and analysts understand the company's reliance on borrowed funds and its potential financial stability or vulnerability.

Limitations:

One limitation of this metric is that it does not account for lease obligations, which can be significant for companies that rely heavily on leasing. Additionally, it does not provide insights into the terms of the debt, such as interest rates or maturity dates, which are crucial for a comprehensive risk assessment.

Applies to:

This metric is applicable to industries where companies typically have significant borrowing, such as manufacturing, utilities, and telecommunications, where capital expenditures are high and often financed through debt.

Doesn't apply to:

This metric may not be as relevant for industries with minimal debt financing or those that rely heavily on leasing, such as technology companies with asset-light models or retail businesses with numerous leased properties, as it excludes lease obligations.

Summary:

Total Debt (excl. Lease Obligations) is a financial metric that measures a company's total interest-bearing liabilities, excluding leases. It is useful for assessing financial leverage but may not provide a complete picture of a company's obligations if leasing is a significant part of its financing strategy.