But it's clear that we should definitely closely examine whether it can manage its debt without dilution. Sherwin-Williams has a very large market capitalization of US$61.9b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. So it has liabilities totalling US$16.5b more than its cash and near-term receivables, combined. Offsetting these obligations, it had cash of US$312.6m as well as receivables valued at US$3.05b due within 12 months. We can see from the most recent balance sheet that Sherwin-Williams had liabilities of US$7.20b falling due within a year, and liabilities of US$12.6b due beyond that. NYSE:SHW Debt to Equity History September 12th 2022 A Look At Sherwin-Williams' Liabilities On the flip side, it has US$312.6m in cash leading to net debt of about US$10.3b. You can click the graphic below for the historical numbers, but it shows that as of June 2022 Sherwin-Williams had US$10.6b of debt, an increase on US$9.05b, over one year. View our latest analysis for Sherwin-Williams What Is Sherwin-Williams's Net Debt? The first step when considering a company's debt levels is to consider its cash and debt together. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. But the more important question is: how much risk is that debt creating? Why Does Debt Bring Risk? We note that The Sherwin-Williams Company ( NYSE:SHW) does have debt on its balance sheet. What we care about is avoiding the permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. David Iben put it well when he said, 'Volatility is not a risk we care about.
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