Can a company have a negative net debt balance?

A company can indeed have a negative net debt balance if it possesses more cash and cash equivalents than its total debt obligations. Net debt is calculated by subtracting total cash, cash equivalents, and marketable securities from total debt. When this calculation results in a negative figure, it indicates that the company has more readily available cash to cover its debts than the debt itself, signifying a strong liquidity position.

This situation is often seen in financially healthy companies that maintain substantial cash reserves, allowing them to pay off their debt with ease or potentially invest that cash instead. This positive financial signal can reflect efficient asset management and contribute to investor confidence.