How to Analyze the Debt of a Company

[@erickim3710]

This dude is such a legend. I always press like when he says "Hi I'm Jimmy".

[@ThinkMoneyBenny]

I definitely need to up my game when it comes to dissecting company financials. Good thing we have channels like this one!

[@PaulVazquezJD]

Think Money Yes, I agree. Jimmy has saved us some time analyzing Apple for us.

[@nicoanastasio3141]

this is hands down the best content on this topic in the whole youtube

[@MarcPugh]

boy was I glad I clicked on this video. Best explanation of financial statements I've seen in a video. Thanks for making and sharing this.

[@georgerobinson2021]

We are already in a big crash Inflation is a catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated. If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest.

[@harrisonjamie794]

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[@georgerobinson2021]

@@harrisonjamie794 I want to build a diversified portfolio based on my personal income. I am easily triggered/highly emotional, which could be detrimental to my portfolio. I hope I am a patient and systematic person. day trading is not for everyone and multiyear holding is not for everyone. I know my strengths that's why I need proper guidance to be able to venture

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[@harrisonjamie794]

@@georgerobinson2021 I’m blessed and realizing I’m not the only one working with *PRISCILLA DIANE AIVAZIAN* will consider myself lucky. I’ve been able to feed and make a living through her advice and great work. For such a person as her, we owe her gratitude, support, and endless prayers as it is not easy to gain access to such a competent and reliable adviser. She isn’t just wise but has all it takes to handle investment and is good at what he does.

[@sagig72]

What a great video Jimmy. Please make more of these about how to read the financial statements, where to look for caveats. Another idea for a video: when looking at analysts projections for corporations, what tools do we have to double-check them or learn what they based their projections on? Again - great video man.

[@mindsinmotion2825]

That's a good suggestion for future content

[@treelight1707]

Amazing vid as usual. I just discovered your channel a couple of weeks ago, and I can't get enough. It's like getting a degree. Thank you for all your efforts into bringing that knowledge to everyone.

[@lcheng6]

This has been the best clarification of liability across 3 financial statement I've seen, by far! Great job, I learnt a lot!

[@FlibbidyFleu]

Great video on financials. Always good to pay close attention to companies that you are not only looking to buy but also keeping track of the ones you own.

[@GregK235]

Thanks for sharing how to find and analyze debt on financial statements. It’s interesting to see how companies in different industries utilize or abuse debt.

[@mindsinmotion2825]

Right and so true.

[@GregK235]

@@mindsinmotion2825 Strong financials will be even more important in this market environment.

[@beginnertradersalyami7526]

you are really excellent you are one of the most people who discuss in easy way please keep simplicity as usual since most people in the internet searching about simplicity.

[@Sunny-uf5nd]

I didn’t expect such a good video on reading financial statements my god . I’m glad I stumbled on this

[@gloriawitek6401]

I always learn something new from this channel, Jimmy. Sometimes it is only a nuance that I di not understand. Always WORTH IT.

[@dheerajpotlapally]

Jimmy awesome explanation .. I am still not sure from your DCF video how you got a total debt of 112,630 given your debt summation from the short and long term debt is (8,784 + 93, 735 = 102,519).. Can you or someone address this? Thanks!

[@2006kw]

I am struggling with this question as well

[@edsaiedi249]

My best guess is that his calculation for total debt included commercial paper as well (10260 for 2019), and that he actually used the most recent quarter's balance sheet statement figures (the more accurate thing to do) available when he made the video (likely Dec 2019) rather than the end of Sept (Apple's annual filing date) 2019 figures you reference above. Including commercial paper as total interest-paying debt (as opposed to deferred liabilities) makes sense as companies pay the prevailing market interest rate on them. In Yahoo Finance, you can see that Commercial Paper together with Term Debt (or Other Current Borrowings) totals to Current Debt, which he's used. His amounts totalled to 112,630. If you use Sept 2019 amounts, you get a total of 108047 when you include commerical paper, which is close to what I suspect are the amount he shows in the DCF video.

[@matthewsisco2905]

@@edsaiedi249 You are quite right. The video was publish in May 2019, and he used the 10-Q from Mar 2019 for the Total Debt of $112,630. In fact if you go to the point in the video where he's looking up the shares outstanding in the financial statement (about time 27:32), you can see that he is referencing that 10-Q.

[@thanakornkunta9236]

I have been having this question about how companies with lots of bonds maturing soon would perform in this crisis, and suddenly I found your video! Thank you Jimmy!

[@hcp0scratch]

A+!!! My go-to investing education channel!

[@ReannaDrum]

I just found your videos today. I love them! Thanks for helping me gain a better understanding of my class materials.

[@rps7746]

Thx Jimmy you are the best

[@khanhnguyen-gl4lj]

thank you, currently doing my CPA review and your channel really helps clear things up

[@Kuro-zc3zg]

Can u explain more about how to get the net borrowing value? thanks a lot

[@manhlinhdoan2406]

I really like this one, short & informative. Bravo

[@AviKhali]

This video answered many of my questions. Thanks very much Jimmy

[@maidenfreek584]

Can't overstate the value I got from this video.

[@robsmith756]

Class act. Weaves together the concepts and statements really really well.

[@hugomeza2910]

This video was so good and informative. More like these please lol. I really enjoy your channel. You provide very good sound investing fundamentals and analysis.

[@chrisglaze1410]

A key aspect to analyzing a company

[@johnwilson8482]

Thanks, Jimmy! I greatly appreciate the videos that explain how to read/understand a company's financial statements. I do not have a business/finance background, which undercuts my ability to estimate the true value of a company. That makes it difficult to know when a stock is "on sale." I'm sure I'll give all of these videos multiple views!

[@walterconn5637]

This video answered some questions that I always wanted to know. Previously, I would simply say that a debt to equity ratio over one was too high. I am also able to use what I learned in this video to analyze the dividend payout ratio of a company also. This video just helped me decide to sell my AEP shares. Thanks

[@mindsinmotion2825]

Great stuff. Thanks for sharing this awesome info.

[@thomasreynolds6355]

Excellent video as always Jimmy. I always find your tutorials detailed and easy to follow. I discovered your channel by chance earlier this year, it is perfect for a keen amateur like myself who is still learning the investment business.

[@LearntoInvest]

I'm very glad you found us 😊

[@PaulVazquezJD]

Learn to Invest Jimmy seems like a good guy.

[@mindsinmotion2825]

I agree that this channel adds a ton of value that is easy to consume.

[@nuxgaming1851]

Hi there, the total debt figure that you used in DCF video was 112,630. You said that you used term debt in 2018 to calculate it. However, the term debt is calculated as follow: 8,784 + 93,735 = 102,519, which does not match with the DCF video's. Could you kindly explain it or I have missed something from this video? Or you have taken the bonds into account? Thanks.

[@2006kw]

Yeah exactly I was wondering the same thing. Anyone know the answer?

[@awaite1980]

Excellent video! You are great at explaining this concept.

[@JulianaMaryJuliana]

Hello

[@mr.schnauzer]

Very valuable insight. Thanks Jimmy!!!

[@AndresSanabriaMusic]

Thanks

[@the.daily.dollar]

Really great video. this is very similar to how i analyse stocks on my channel and in my personal life for years.

[@LainoH1017]

how did he get 8.784 in term debt?

[@gavinli2443]

Hey Jimmy, you're videos are awesome and I've learned so much about the accounting and analyzing a companies financials. Keep up the great work

[@marcoscastro5217]

man you're great, this video should be kept in mt. Olympus for the eternity

[@CASHYMUSIC]

OMG thank you for explaining this, learned something new 👍

[@G500sottovoce]

Great video! Thanks Jimmy

[@tommywho924]

This was incredibly helpful. Thank you!

[@harrycromie-colley8905]

Helpful indeed!

[@finfabable]

Great video! But I can t find current term debts on Yahoo finance

[@G500sottovoce]

It is worth mentioning a ratio that is helpful when evaluating debt - Interest cover: Ebit/Interest Expense

[@keno9964]

Hi another fantastic video and much appreciated. just a question, when I add up the term debts here for 2018 and compare to the debt on the DCF video, they are different. DCF video has debt at 112630 but here its about 10000 less. Thanks.

[@PapaRus1]

Hi Jimmy The posted EPS for stocks, is that earnings after debt payments, or debt has to be subtracted from EPS to figure out how much money is truly left for shareholders?

[@lmin4212]

Thank you

[@phantomcreamer]

Can someone explain what values to use on Yahoo finance? They don't have "term debt" on the balance sheet

[@kajlac]

Fantastic content!

[@jacktowle9931]

Where does he explain net borrowings?

[@private464]

Please do an analysis of RCL. I am seriously thinking about starting a large position in it, once/if it retests lows of around 20. They have a lot of debt and are burning cash right now, understandably, but I think that the CEO who has been with the company for over 30 years will do whatever he has to so that they "stay afloat" and don't go bankrupt. Then, in 2 or 3 years time, I think it's very likely that they will return to earlier levels of around 100...which would be 5 times my money! I really would appreciate your opinion on this bankruptcy risk (even though nobody knows the future). Thank you so much for your videos and help.

[@STREAM123456789]

Thanks Jimmy 🙏🏻 Job well done 👍🏻

[@nitinprasad3842]

Hi Jimmy Can you please post a video on how to read annual reports and also which source to learn about specific industry.

[@AmishWebmaster]

Thank you for sharing this. I am guilty of looking at charts only, since I am not a "CPA."

[@considerthelogic5138]

Its very important for equity investors to understand that in the event of a bankruptcy the bond holders get payed 1st. Check the debt of the companies you want to buy.

[@Commando303X]

I see that you are considering the ratio of free-cash-flow (F.C.F.) to short-term debt; but, how do you take into account (no pun intended) the ability of a company to address capital leases, accounts payable, taxes payable, and "other" short-term liabilities? That is, what if existing cash, plus expected F.C.F., are less than the sum of short-term payables? This often is the case, in review of many businesses. Thanks.

[@CaseyBurnsInvesting]

Taking a couple pages out of my man PPCIan’s book. Gotta know what’s concerning on a bad balance sheet.

[@ivettjiron5942]

Thank you so much I am doing my dissertation

[@Imwilfred]

Any chance you can show us how you arrived at the net borrowings used in the DCF video?

[@SergiMedina]

Precisely, I was learning more about this these days... I guess we're in the same page! ;) Thanks.

[@robinhuijbregts6011]

If a company does not discclose it's short term debt, how would you figure it out for the DCF?

[@wolfofdubai]

Lots of debt = bad Less debt = good

[@Mercurywheeler]

Wolf of Dubai Stocks Investing Channel Miller-Modiliagni explains how much debt is fine for a company. Unleveraged company in times where interest rates are close to zero is a mistake.

[@pierrereynaud784]

Hey Jimmy, I can see that many of us keep asking the same question, we can't see how you got that "Short/Current Term Debt" number, I checked multiple wbsites and none give that number even on different companies, could you please explain in the comment section how you got the 8784 in 2018, or the 6496 in 2017 ?

[@pierrereynaud784]

Actually found the numbers in Market watch under "Current Portion of Long Term Debt" but they give you 3 digits at most so you got them from somewhere else.

[@eugenelau4459]

Could you enlighten me on how you derived Apple's Net Borrowing figure in the DCF Calculation video?

[@Commando303X]

One often talks of debt, but what about non-debt-related liabilities? Thank you very much.

[@kegomania]

So my issue is that I'm importing data automatically into excel. The data auto refreshes every day. and Short of going directly to the 10K/Q, I cant find net borrowings. Even the data as presented here, the "term data" isn't a line I see on yahoo, barchart, guru focus, finviz, wall street journal, etc. Some insight to where specifically you are getting that line item would go the distance. for those wondering: The way I import the data is to select where you want the top left cell of the table. Click on the "Data" tab at the top. Click Data>From Web>Paste URL where data is located, press ok, excel will open the navigator window. Under display option, excel will show you tables at the provided link. Right click the table you want to import from the list click "load to...". Now the "Import Data" window will open. Click the "Existing Worksheet" bubble under "where do you want to put the data?. Click OK and the table data from the website will load into your sheet,

[@vkoptchev]

Why would apple borrow if they have so much cash?

[@PaulVazquezJD]

I would agree with the other commentator. If I can us my cash to make more money in the market then investing in a depreciating asset then I might not lose as much and it leaves me open to leverage more or to keep my personal balance sheet looking better.

[@danangelakov7247]

Thanks for all the videos! What about capital leases though, they are interest bearing, are they debt?

[@johnc8627]

Good stuff jimmy, can you do an excel tutorial video on your discount free cash flow spreadsheet

[@mindsinmotion2825]

I would be interested in sunbathing like that too

[@kensheat6323]

Brilliant Jimmy love your way of explaining as a part 2 can you show us a business getting in debt problems is opposite to Apple

[@rataflaca1]

you should do a video of when to add debt to DFC evaluation and examples

[@MrPowerrangers99]

93735+8784 =102519. But, you have taken Total Debt in dcf calculation 112630. Can u please explain How ?

[@achesontrading427]

GREAT VIDEO BUT COULD YOU DO TSLA's debt?

[@notsocommon1600]

Does term debt also include the interest the company has to pay for the year?

[@tanson86]

Why do companies take loan on low interest rate and then issue bond at higher interest rate? Is it because they need more cash? I hope my question is valid.

[@mindsinmotion2825]

Good question

[@Mercurywheeler]

Tax reasons possibly?

[@shakedmani6899]

Hi Jimmy, first thanks a lot for this video. In 2018 the short tem debt on apples balance sheet was 20,748 ( Commerical paper + Other Current Borrowings ). Why did u consider only the "Other Current Borrowings" part (8,784)

[@TrailBlazer5280]

Did Apple update their balance sheet? When I look on Yahoo Finance for 2018 it says that Current Debt is $20,748,000, not $8,784,000. This is what threw me off. And in this video its called "Term Debt" which I assumed was the same thing

[@lidaseow4180]

try searching for it in the 10-K

[@jiangsongqing]

Hi Jimmy, some companies have capital lease. Do you add capital lease obligation when you calculate long term debt for cost of debt? Thanks

[@DylanRoberts7]

Where do you get your balance sheets from, yahoo, wsj?

[@khajamohiuddin7803]

Hi, Please answer my question that i have observed sometime in moneycontrol Longterm borrowings and short term borrowings are zero but screener shows borrowings as some amount..Like Bosch ltd...why this difference...

[@ada7831]

Can analyse banks since they don't have short/long debts in their balance sheets, just liabilities? How can we value discounted cash flow, then?

[@ooiyoubin]

Could you answer one QUESTION for me PLEASE, I got the point that debt is mainly on loan payments and interest payments, whereas liabilities include future expenses such as account payable, accrued expenses and other current liabilities, but since those liabilities payments must be made in 12 months, shouldn't we as investors include liabilities when evaluating a company's ability of repayment?

[@SilkBC74]

In your AAPL DCF video, you have Total Debt being $112,630, but from the numbers you got from their most recent 10-Q for that video (quarter ending Mar 2018), the short-term and long-term debt numbers are $10,505 and $90,201, which adds up to $100,706 -- where is the other $11,924 of Total Debt coming from?

[@LainoH1017]

I need to know how he got the 8,784 what all was added or subtracted to get this number?

[@Everest314]

Is interest expense included in the operating cashflow or cap ex here? (I thought it wasn't part of either.) Wouldn't it make sense to also subtract that to estimate the free cashflow?

[@emanuelnemec]

Hey jimmy. loved your videos and just subscribed. There is one thing that confuses me if you would be that kind to explain. Under balance sheet, in current debt, is interest expense included in that or only bonds that mature? Thanks

[@matthewknight766]

Jimmy, please make a video on companies that cooked the books and how an invester could have spotted it.

[@blackpilledbuddha4944]

can you please show how much of a company profit is in cash and how much in credit.

[@perrotta48]

Why not include Commercial Paper as part of the debt?

[@robertgao521]

Jimmy from the O.C. is that you!?

[@steinbjorvatn1358]

I'm having a hard time finding current term debt on STX stocks financials. Could you help me out here? Could it be under a different name?

[@steinbjorvatn1358]

Looking through their financial statements, they are not providing current term debt.

[@albertocapuano6287]

Why 91 term debt doesn't appear in cash and cash equivalents,when instead in the example you made 100 should have appeared??

[@killianfoley]

Question: Just wondering why you're dividing interest expense into CFO rather than EBIT (Operating Income) since CFO includes Net Income which is after interest. Hope you can clear this up for me 🤞

[@abraxasstocky2045]

Hi Jimmy, thanks a lot, great vid!! Could u (or someone else) pls help me with some questions though? 1. Is Free Cash Flow from operations accounted on in the Cash and Cash Equivalent section of the Balance Sheet, or is it extra? From ur video I would deduct that no is the answer, but just want to be sure. 2. Does Current Term debt includes Current Interest Expense (always)? Many thanks!!

[@phantomcreamer]

Cash flow is a snap shot of what cash was generated in a quarter. Cash and cash equivalents is cumulative. To illustrate, if you were a merchant who bought and sold items at a market, your cash flow would be what you take home in your pockets that day. When you get home, you put it in the jar of valuables you have hidden in your closet. That jar is your cash and cash equivalents.

[@PaulVazquezJD]

Hi, Jimmy.

[@ianrubbish]

why would interest rate increase in the future be a problem to a company's debt? I assume they issue a bond at a lower fixed interest rate before then. Won't they be able to repay the principal + interest?

[@LearntoInvest]

If the company has enough cash to repay the principal at the end of the bond, then of course, higher rates shouldn't matter as much to them. But most companies simply take out more debt to pay off their old debt at the end of the life of the bond. That's what I was thinking when I said that. Hopefully that clears it up a bit. 🙂👍 And thanks for the support 😊

[@ianrubbish]

Learn to Invest thank you so much

[@sprsumfalwin]

Me after hearing interest down: Run and borrow 50% of my capital to invest.

[@davidkoba]

Apple is a one of a kind company. The strength of their financials is second to none. People give Tim Cook a hard time for not innovating but he has literally take the torch and lit a bonfire with it.

[@albertocapuano6287]

Sorry bu I didn't understand why current term debt is so much higher than interest expense. Please could someone explain it to me?

[@vvolfflovv]

Not sure if others prefer white but I would love if you would consider a black background as white destroys my eyes.

[@nikgreek3774]

Jimmy we want you for financial minister of Greece.You are legend, I am biggest fan in the world.I study one month about investments and I think that I ve been 4 years at a university! YOU ARE THE BEST BROTHER GOD BLESS YOU