Net Debt is a financial metric that calculates the total outstanding debt of a company and subtracts its cash and cash equivalent balances from this amount. This measurement provides an insight into the overall financial obligations of the company when accounting for its liquid financial assets. Companies often use net debt to assess their leverage and overall financial health. A lower net debt figure indicates stronger financial stability and liquidity. For instance, if a company has a total debt of $1 million and cash reserves of $300,000, its net debt would be $700,000. Net debt is a helpful indicator for stakeholders, including investors and creditors, to evaluate a company’s capacity to service its debt and maintain financial flexibility. It is crucial for strategic financial decisions and is often considered alongside other financial metrics like EBITDA and equity. Overall, net debt provides a clear snapshot of how much debt a company still owes after accounting for its liquid assets.