over the past three months shares of firstenergy inc fe moved higher by 1481 when understanding a companies price change over a time period like 3 months it could be helpful to look at its financials one key aspect of a companies financials is its debt but before we understand the importance of debt lets look at how much debt firstenergy has according to the firstenergys most recent balance sheet as reported on october 25 2022 total debt is at 2151 billion with 2091 billion in longterm debt and 60800 million in current debt adjusting for 25100 million in cashequivalents the company has a net debt of 2126 billion lets define some of the terms we used in the paragraph above current debt is the portion of a companys debt which is due within 1 year while longterm debt is the portion due in more than 1 year cash equivalents includes cash and any liquid securities with maturity periods of 90 days or less total debt equals current debt plus longterm debt minus cash equivalents investors look at the debtratio to understand how much financial leverage a company has firstenergy has 4485 billion in total assets therefore making the debtratio 048 generally speaking a debtratio more than 1 means that a large portion of debt is funded by assets as the debtratio increases so the does the risk of defaulting on loans if interest rates were to increase different industries have different thresholds of tolerance for debtratios for example a debt ratio of 40 might be higher for one industry but normal for another besides equity debt is an important factor in the capital structure of a company and contributes to its growth due to its lower financing cost compared to equity it becomes an attractive option for executives trying to raise capital interestpayment obligations can impact the cashflow of the company having financial leverage also allows companies to use additional capital for business operations allowing equity owners to retain excess profit generated by the debt capital looking for stocks with low debttoequity ratios check out benzinga pro a market research platform which provides investors with nearinstantaneous access to dozens of stock metrics  including debttoequity ratio click here to learn more this article was generated by benzingas automated content engine and reviewed by an editor