over the past three months shares of bristolmyers squibb inc bmy rose by 213 before we understand the importance of debt lets look at how much debt bristolmyers squibb has based on bristolmyers squibbs balance sheet as of october 26 2022 longterm debt is at 3697 billion and current debt is at 213 billion amounting to 3910 billion in total debt adjusted for 773 billion in cashequivalents the companys net debt is at 3136 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 to understand the degree of financial leverage a company has investors look at the debt ratio considering bristolmyers squibbs 9820 billion in total assets the debtratio is at 04 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 35 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 however due to interestpayment obligations cashflow of a company can be impacted 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