Effective Debt


DEFINITION of 'Effective Debt'

The net sum of all of a company's outstanding debt. In addition to standard debt issues, this figure will also aggregate and capitalize any payments that the company is regularly making, such as mortgage or lease payments.

BREAKING DOWN 'Effective Debt'

The effective debt metric gives investors a more accurate measure of a company's overall debt load. Companies operating in certain sectors, such as real estate and retail, can have a good portion of their liabilities tied up in real estate leases and payments, and a thorough cash flow analysis should take these payments into account.

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    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  2. What are working capital costs?

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  3. How do I read and analyze an income statement?

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  4. How can companies use the cash flow statement to mislead investors?

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  5. How do dividends affect the balance sheet?

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