Net Debt
Private Credit glossary · Underwriting & Credit Analysis
Definition
Total financial debt minus cash and cash equivalents.
Net Debt in plain English
Net debt asks a simple, honest question: if a company paid off its loans right now using the cash it has in the bank, how much debt would still be left? You take everything it owes (total debt) and subtract the cash it's sitting on. If a company owes $100 but has $30 in cash, its net debt is $70 — because that cash could wipe out part of the debt instantly. It's a truer picture of how burdened a company really is than just looking at the loan balance alone.
Learn these first
Related Private Credit terms
Private Credit practice questions · Private Credit flashcards · Private Credit study guide