 Shares of Huttig Building Products Inc. NASDAQ: HBP increased by 96.72 in the past three months. Before we understand the importance of debt, lets look at how much debt Huttig Building Products has.Huttig Building Productss Debt Based on Huttig Building Productss balance sheet as of August 4, 2020, long-term debt is at 125.60 million and current debt is at 1.70 million, amounting to 127.30 million in total debt. Adjusted for 1.80 million in cash-equivalents, the companys net debt is at 125.50 million.To understand the degree of financial leverage a company has, investors look at the debt ratio. Considering Huttig Building Productss 288.20 million in total assets, the debt-ratio is at 0.44. As a rule of thumb, a debt-ratio more than 1 indicates that a considerable portion of debt is funded by assets. A higher debt-ratio can also imply that the company might be putting itself at risk for default, if interest rates were to increase. However, debt-ratios vary widely across different industries. For example, a debt ratio of 35 might be higher for one industry, whereas normal for another.Why Debt Is Important Besides equity, debt is an important factor in the capital structure of a company, and contributes to its growth. Due to its lower financing cost compared to equity, it becomes an attractive option for executives trying to raise capital.However, interest-payment obligations can have an adverse impact on the cash-flow of the company. Equity owners can keep excess profit, generated from the debt capital, when companies use the debt capital for its business operations.See more from Benzinga Earnings Scheduled For August 3, 2020 Stocks That Hit 52-Week Highs On FridayC 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. 