shares of illumina inc ilmn fell by 289 in the past three months 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 illumina has based on illuminas financial statement as of february 17 2023 longterm debt is at 149 billion and current debt is at 125 billion amounting to 273 billion in total debt adjusted for 201 billion in cashequivalents the companys net debt is at 72400 million 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 illuminas 1225 billion in total assets the debtratio is at 022 as a rule of thumb a debtratio more than 1 indicates that a considerable portion of debt is funded by assets a higher debtratio can also imply that the company might be putting itself at risk for default if interest rates were to increase however debtratios vary widely across different industries a debt ratio of 25 might be higher for one industry but average for another why investors look at debt 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 interestpayment obligations can have an adverse impact on 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