1. Total Debt = Long Term Debt + Short Term Debt
A debt is an amount of money borrowed by one party from another, and must be paid back. Total debt is the addition of long-term debt, which is debt that is due in one year or more, and short-term debt, which is any debt that is due within one year. The combination of the two is total debt.
- 2007 – $8.008 billion + $329 million = $8.337 billion
- 2008 – $7.491 billion + $835 million = $8.326 billion
- 2009 – $8.124 billion + $749 million = $8.873 billion
- 2010 – $8.674 billion + $233 million = $8.907 billion
- 2011 – $9.125 billion + $631 million = $9.756 billion
Waste Management’s total debt has increased from $8.337 billion in 2007 to $9.756 billion in 2011, an increase of 17.02%.
2. Total Liabilities
Liabilities are a company’s legal debts or obligations that arise during the course of business operations, so debts are one type of liability, but not all liabilities. Total Liabilities are the addition of long-term liabilities, which are the liabilities that are due in one year or more, and short-term, or current liabilities, are any liabilities due within one year. The combination of the two equals the total liabilities.
- 2007 – $14.383 billion
- 2008 – $14.325 billion
- 2009 – $14.869 billion
- 2010 – $15.216 billion
- 2011 – $16.499 billion
Waste Management’s liabilities have increased from $14.383 billion in 2007 to $16.499 billion in 2011, an increase of 14.71%.
In analyzing the company’s total debt and liabilities, we have seen an increase over the past 5 years. Much of this debt was incurred through the purchase of assets. The next step will reveal if the company has the ability to pay for these assets.
To read more: Analyzing Waste Management’s Debt And Risk