Net Debt Paydown Yield

The change of total debt a company has paid relative to its market capitalization over the last twelve months.

Companies with a high net debt paydown yield indicate companies that are paying off a significant portion of its debt over time.

Formula

Net Debt Paydown Yield = (average of total debt over four quarters looking back from 2 quarters prior - total debt average over the prior 4 quarters) / market capitalization

Total debt = current debt + long term debt

Net Debt Paydown Yield shows the change in the average of total debt (current portion and the long term portion of debt) over the last four quarters compared to the average of the four quarters prior to the last quarter. Let's say a company has an average of 12 million of total debt on March 31st 2013 (We'll average the total debt period between March 31st, 2013 and March 31st, 2012).

If a company has an average of 10 million of total debt on June 30th 2013 (We'll average the total debt between June 30th 2013 and June 30th 2012).

The difference between debt and the two periods is approximately two million. If the company has a market cap of twenty million, 2/20 would indicate a net debt paydown yield of 10%.

Related Terms Shareholder Yield