Yes, Dave & Buster's is currently in debt. The company holds a significant amount of debt, which substantially outweighs the cash reserves it has on its balance sheet.
Understanding Dave & Buster's Financial Leverage
Dave & Buster's carries a substantial debt load. As of recent figures, the company's debt amounts to $2.89 billion. This figure stands in stark contrast to its cash on hand, which is reported at only $13.1 million.
To assess a company's financial health and how burdened it is by debt, financial analysts often look at leverage ratios. One critical metric is the net-debt-to-EBITDA ratio. This ratio helps determine how many years it would take for a company to pay off its debt if its net debt and earnings before interest, taxes, depreciation, and amortization (EBITDA) remained constant.
For Dave & Buster's, this ratio is 5x, based on its EBITDA of $544.1 million over the last 12 months. A ratio of 5x indicates that the company's debt is five times its annual earnings, suggesting a high level of financial leverage. Generally, a net-debt-to-EBITDA ratio around 2x-3x is considered healthy, while a ratio of 5x or higher often indicates that a company is overleveraged.
Key Financial Indicators
To summarize Dave & Buster's debt situation:
| Financial Metric | Amount | Implication |
|---|---|---|
| Total Debt | $2.89 Billion | Substantial debt burden. |
| Cash on Balance Sheet | $13.1 Million | Very limited cash reserves relative to debt. |
| Last 12 Months EBITDA | $544.1 Million | Company's earnings before certain non-cash expenses. |
| Net-Debt-to-EBITDA Ratio | 5x | Indicates the company is highly leveraged, often considered overleveraged. |
An overleveraged position means that a company relies heavily on borrowed money. While debt can fuel growth, excessive debt can pose significant risks, especially during economic downturns or if earnings decline, as it can make it challenging to service debt payments and access additional financing.
