Net debt

Net debt takes a company's total debt and subtracts its cash and short-term investments, showing how much borrowing is left after netting out the cash that could, in theory, pay part of it down right away.

The formula is:

A positive net debt means a company owes more than it holds in cash, a normal position for most established businesses, especially ones funding growth, acquisitions, or capital spending with borrowed money. A negative net debt means the reverse, sometimes called a net cash position: the company could pay off all its debt today and still have cash left over. Neither is automatically good or bad by itself, what matters is whether the borrowing funded something that's actually growing the business, and whether the company generates enough cash to service it comfortably.

Net debt also feeds directly into enterprise value, which adds net debt (or subtracts net cash) to market cap to estimate what it would actually cost to acquire a company outright, debt and all.