Term · Balance Sheet & Debt
Gross debt
In briefGross debt is the sum of interest-bearing financial liabilities before deducting cash and cash equivalents and shows the absolute contractual debt burden. For small caps it is important, because liquidity may be tied up or earmarked and cannot always be used for repayment.
Definition
The sum of interest-bearing financial liabilities before deducting cash and cash equivalents. It shows the absolute contractual debt burden.
How it is calculated
Formula. Gross debt = short-term + long-term interest-bearing debt.
Why it matters for small caps
In the small-cap segment, gross debt is important because liquidity may be tied up or earmarked and is not always freely available for debt repayment.
Common misreadings
- It is often replaced by net debt; both metrics must be considered together.
In the process
Frequently asked
What is gross debt?
It is the total interest-bearing debt without netting against available cash. It shows how high the contractual debt is in total.
How is gross debt determined?
You add up the short-term and long-term interest-bearing debt. Cash and cash equivalents are not deducted.
Why is net debt alone not enough?
The net view assumes that cash is freely available for repayment. If liquidity is tied up, gross debt gives the more realistic picture – both belong together.
Related terms
Sources
Primary
IFRS Foundation – IFRS 7 Financial Instruments: Disclosures
https://www.ifrs.org/issued-standards/list-of-standards/ifrs-7-financial-instruments-disclosures/
https://www.ifrs.org/issued-standards/list-of-standards/ifrs-7-financial-instruments-disclosures/
Methodology
IFRS Foundation – IFRS Accounting Standards Navigator
https://www.ifrs.org/issued-standards/list-of-standards/
https://www.ifrs.org/issued-standards/list-of-standards/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.