Pacific Gas & Electric Co. (NYSE: PCG) – PG & E’s Debt Statement


Shares of PG&E (NYSE:PCG) decreased by 7.20% in the past three months. Before we consider the importance of debt, let’s take a look at how much debt PG&E has.

PG & E’s fault

According to the PG & E’s most recent balance sheet, as reported on April 29, 2021, total debt stands at $ 41.06 billion, with $ 37.80 billion in long-term debt and $ 3.26 billion in current debt. Adjusted for $ 229.00 million in cash equivalents, the company has net debt of $ 40.83 billion.

Let’s define some of the terms we used in the above section. Current debt is the portion of a company’s debt that is due within 1 year, while long-term debt is the portion that is due in more than 1 year. Cash equivalents include cash and any liquid securities with a maturity of 90 days or less. Total debt is equal to current debt plus long-term debt less cash equivalents.

Investors look to the debt ratio to understand how much financial leverage a company has. PG&E has $ 98.56 billion in total assets, making the debt ratio 0.42. As a rule of thumb, a debt ratio more than one indicates that a significant portion of debt is funded by assets. A higher debt ratio could also mean that the company could put itself at risk if interest rates were to rise. However, debt ratios vary widely between different industries. A debt ratio of 40% may be higher for one industry and normal for another.

Why do investors look at debt?

Debt is an important factor in a company’s capital structure and can help it grow. Debt typically has relatively lower financing costs than equity, making it an attractive option for executives.

However, interest payment obligations can negatively impact the company’s cash flow. Having financial leverage also allows companies to use additional capital for business activities, allowing owners to keep the excess profit generated by the debt capital.

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PG & E's debt statement

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