Debt

        There are many reasons a company takes on debt: to fund new projects, to issue a dividend, to make investments, etc. What is Debt? Debt is money that a company borrows from an outside source. For the most part, having a lot of debt is a bad thing. However, many investment companies have a lot of it anyway. This is due to the fact that their investments take time to develop and don't always pay off. It isn't always something you need to worry about.
        Debt isn't usually repaid all at once. Like a mortgage, it can be paid off in small increments over time. However, with time comes higher interest rates. Having a large amount off debt for a long period of time may mean that the company has to pay much, much more than it borrowed in the first place! This is why you usually want to choose stocks where the cash balance slightly evens out the debt.
        In addition, debt can significantly decrease how much a company is valued to other investors. When companies are bought, their debt is factored into the equation so their value may be less. If you consider this on the stock market, the market cap of a company may seem smaller than its enterprise value due to this factor and the amount of cash it has. On the other hand, sometimes debt is important to the continued growth of a company.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.