IntermediateMAD Academy0:45Fundamentals

Debt Is Fine Until It Is Due

Leverage ratios say how much a company owes; coverage ratios say whether it can pay. The second question is the urgent one.

0:45 · 6 scenes

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What the Lesson Covers

  1. 0:00How much a company owes matters less than whether it can pay it.
  2. 0:05Two different questions. Leverage measures the size of the debt. Coverage measures the ability to service it.
  3. 0:14Coverage is the urgent one. Operating income divided by interest. Under about two, there is little room.
  4. 0:23The maturity wall. Debt due in ten years is a footnote. Debt due next year is a decision.
  5. 0:32Where to find it. The debt footnote lists every maturity by year. It is the most useful table in the filing.
  6. 0:40Read the schedule, not just the total.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Debt Is Fine Until It Is Due — MAD Academy Training Video · MadStockAlerts