Tenting World Holdings’ Debt Overview – Tenting World Holdings (NYSE:CWH)

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Over the past three months, Camping World Holdings Inc. CWH fell 19.12%. To understand a company’s price action over a period of about 3 months, it can be helpful to look at its financials. An important aspect of a company’s finances is its debt, but before we understand the meaning of debt, let’s look at Camping World Holdings’ debt levels.

Camping World Holdings debt

According to Camping World Holdings’ latest balance sheet dated November 2, 2022, total debt is $2.42 billion, of which $1.48 billion is long-term debt and $937.48 million is short-term debt. Adjusted for $148.24 million in cash equivalents, the company has net debt of $2.27 billion.

Let’s define some of the terms we used in the paragraph above. Current Debt is that portion of a company’s debt that falls due within one year, during Long-term liabilities is the portion due in more than 1 year. cash equivalents includes cash and all liquid securities with maturities of 90 days or less. total debt equals current liabilities plus non-current liabilities minus cash equivalents.

Investors look at the leverage ratio to understand how much financial leverage a company has. Camping World Holdings has total assets of $4.51 billion, which translates to a debt ratio of 0.54. As a rule of thumb, a debt ratio greater than 1 indicates that a significant portion of debt is funded by assets. A higher leverage ratio can also mean that the company faces default risk if interest rates rise. However, leverage ratios vary widely across different industries. For example, a 25% debt ratio may be higher for one industry but normal for another.

Why Debt Matters

In addition to equity, borrowed capital is an important factor in the capital structure of a company and contributes to its growth. The lower cost of financing compared to equity makes it an attractive option for executives trying to raise capital.

However, due to interest payment obligations, a company’s cash flow can be adversely affected. Shareholders can keep excess profits from the debt when companies use the debt for their operations.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.