What Is Net Debt?

By Matthew Frankel, CFP – Updated Oct 12, 2025 at 11:31 PM EST

Key Points

Net debt is total debt minus cash and liquid assets, giving a clearer financial picture.
Comparing net debt among similar companies can highlight industry-specific financial health.
Monitor net debt-to-EBITDA ratio over time to assess a company's changing financial strength.

When analyzing stocks you might want to invest in, one very important area to look at is a company's debts. However, simply looking at a company's total outstanding debt doesn't always give the full picture, especially when a company has a relatively high amount of cash or liquid assets. Instead, net debt can be the better metric.

Here's a rundown of what net debt means, why it's important, and how you might want to incorporate it into your analysis.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy, Home Depot, and Nvidia. The Motley Fool recommends Lowe's Companies. The Motley Fool has a disclosure policy.