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Analyzing Potash Corporation’s Debt And Risk (POT:NYSE)

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 Potash Corporation’s (POT) total debt, total liabilities, debt ratios and WACC.

1. Total Debt = Long-Term Debt + Short-Term Debt

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 – $1.339 billion + $90 million = $1.429 billion
  • 2008 – $1.740 billion + $1.324 billion = $3.064 billion
  • 2009 – $3.319 billion + $729 million = $4.048 billion
  • 2010 – $3.702 billion + $1.871 billion = $5.573 billion
  • 2011 – $3.701 billion + $832 million = $4.533 billion

Potash Corp.’s total debt has increased significantly since 2007 but has decreased since 2010. In 2010, the company reported a total debt of $5.573 billion. In 2011, the company’s total debt was decreased to 4.533 billion. Over the past 5 years, Potash Corp.’s total debt has increased by 317.21%.

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