# Net Debt Calculator Calculate net debt by subtracting cash from total debt. Evaluate company financial health with this free net debt calculator. ## What this calculates Calculate a company's net debt by subtracting cash and cash equivalents from total debt. Net debt shows how much debt would remain if all liquid assets were used to pay it down, making it a better measure of financial health than gross debt alone. ## Inputs - **Short-Term Debt** ($) — min 0 — Debt due within one year (current portion of long-term debt, credit lines, etc.). - **Long-Term Debt** ($) — min 0 — Debt due beyond one year (bonds, term loans, mortgages, etc.). - **Cash & Cash Equivalents** ($) — min 0 — Cash on hand, money market funds, treasury bills, and other liquid assets. ## Outputs - **Total Debt** — formatted as currency — Sum of short-term and long-term debt. - **Net Debt** — formatted as currency — Total debt minus cash and equivalents. - **Cash Coverage Ratio** — formatted as percentage — Percentage of total debt covered by cash. ## Details Net debt is one of the most important metrics for evaluating a company's true debt burden. The formula: Net Debt = Total Debt - Cash and Cash Equivalents. A company with $2.5 million in total debt but $750,000 in cash has a net debt of $1.75 million. A negative net debt means the company has more cash than debt, which is generally a sign of strong financial health. Many large tech companies like Apple and Google carry negative net debt because they hold massive cash reserves. On the other hand, a high net debt relative to earnings or equity can signal financial risk. Investors and analysts often look at the Net Debt to EBITDA ratio to gauge whether a company can comfortably service its obligations. A ratio under 2x is typically considered healthy, while anything above 4x may raise concerns. Lenders also use net debt when evaluating creditworthiness and setting loan covenants. ## Frequently Asked Questions **Q: What counts as cash equivalents?** A: Cash equivalents are highly liquid investments that can be converted to cash within 90 days with minimal risk of value change. Common examples include money market funds, Treasury bills, commercial paper, and certificates of deposit maturing within three months. Stocks, bonds with longer maturities, and restricted cash are generally not included in cash equivalents. **Q: What does negative net debt mean?** A: Negative net debt means a company holds more cash and liquid assets than its total debt. This is a strong financial position because the company could theoretically pay off all its debt immediately and still have cash left over. Companies like Apple, Alphabet, and Microsoft have historically carried negative net debt. However, holding too much cash can also indicate the company is not investing enough in growth. **Q: How is net debt different from total debt?** A: Total debt is the sum of all short-term and long-term borrowings without considering available cash. Net debt subtracts cash and cash equivalents from total debt, giving a more realistic picture of a company's debt burden. Two companies can have the same total debt but very different net debt if one holds significantly more cash. Net debt better reflects a company's ability to meet its obligations. **Q: What is a healthy net debt to EBITDA ratio?** A: A net debt to EBITDA ratio below 2x is generally considered healthy, meaning the company could pay off its net debt in about two years of earnings. Ratios between 2x and 4x are moderate. Above 4x starts to raise red flags, and above 6x often indicates high leverage risk. The acceptable level varies by industry, as capital-intensive industries like utilities typically carry higher ratios than tech companies. --- Source: https://vastcalc.com/calculators/finance/net-debt Category: Finance Last updated: 2026-04-08