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 Sandridge Energy’s (SD) 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 – $1.067 billion + $15 million = $1.082 billion
- 2008 – $2.375 billion + $17 million = $2.392 billion
- 2009 – $2.579 billion + $12 million = $2.591 billion
- 2010 – $2.909 billion + $7 million = $2.916 billion
- 2011 – $2.814 billion + $1 million = $2.815 billion
Sandridge Energy’s total debt has increased since 2007. In 2007, the company reported a total debt of $1.082 billion. In 2011, the company’s total debt increased to 2.815 billion. Over the past 5 years, Sandridge Energy’s total debt has increased by 260.16%.
To read more:Analyzing Sandridge Energy Debt And Risk
For other analysis of Sandridge Energy please read: Is Sandridge Energy’s Valuation a Takeover Target? (NYSE:SD)