A company’s debt, liabilities and risk are very important factors in understanding the company. Having an understanding of a company’s debt and liabilities is a key component in understanding the risk of a company, thus aiding in the decision to invest, not to invest, or to stay invested in a company. There are many metrics involved in understanding the debt of a company, but for this article, I will look at 3M Company‘s (MMM) total debt, total liabilities, debt ratios and WACC.
Through the above-mentioned four main metrics, we will understand more about the company’s debt, liabilities and risk. If this summary is compared with other companies in the same sector, you will be able see which has the most debt and the most risk.
All material is sourced from Google Finance, Morningstar and Company webpage.
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 sum 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.
- 2007 – $4.088 billion + $901 million = $4.989 billion
- 2008 – $5.224 billion + $1.552 billion = $6.776 billion
- 2009 – $5.204 billion + $613 million = $5.817 billion
- 2010 – $4.277 billion + $1.269 billion = $5.546 billion
- 2011 – $4.563 billion + $682 million = $5.245 billion
To read more: http://seekingalpha.com/article/840191-analyzing-3m-company-s-debt-and-risk
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