What is net debt calculated as?

Net debt is calculated as total debt minus cash. This metric provides a clearer picture of a company's overall financial leverage by accounting for the cash and cash equivalents that can be used to repay outstanding debt. By subtracting cash from total debt, net debt reflects the actual indebtedness of the company, as it shows how much debt remains after considering accessible liquid assets.

This calculation is important for investors and analysts as it offers insight into a company's financial health, helping them assess the risk associated with its capital structure. A higher net debt figure indicates a greater reliance on debt financing, which may be a sign of potential financial stress, especially if cash reserves are low and debt levels are high.

The other options do not accurately represent how net debt is determined. Total assets minus liabilities typically reflects net worth or equity, not a measure of debt. Total equity minus investments does not pertain to debt directly, and total cash plus liabilities does not provide a meaningful measure of a company’s leverage or indebtedness. Thus, the calculation of total debt minus cash is the accurate way to arrive at net debt.