What Is Net Debt Per Capita?
Net debt per capita is a measurement of the value of a government's debt expressed in terms of the amount attributable to each citizen under the government's jurisdiction.
The level of net debt per capita can be a factor to consider when analyzing a government's ability to continue to pay its debt service costs through its current levels of tax revenue.
Key Takeaways
- Net debt per capita is calculated by dividing a jurisdiction's total debt by the number of people living within it.
- Net debt per capita is one way to assess the level of government debt.
- This statistic is often used to make a political statement about current fiscal policy rather than as a true economic indicator.
Understanding Net Debt Per Capita
Net debt per capita is how much debt a government has per citizen. It is most often calculated at the national level, but it can also be applied to state and city governments.
This number is sometimes used to help evaluate the default risk of a government's bonds as well as to assess its overall economic health.
Net debt per capita is a simple calculation to perform. The formula is:
Net Debt Per Capita = (Short-Term Debt + Long-Term Debt – Cash & Cash Equivalents)/Population
For example, if a country with a population of 300 million people has a total debt of $950 billion and cash of $20 billion, its net debt per capita is:
Net Debt Per Capita = ($950 Billion – $20 Billion)/300 Million = $3,100
These numbers can usually be obtained without the effort of gathering the data and calculating it. Many public sources and economic think tanks regularly publish the figures.
$34.01 Trillion
...The U.S. national debt at the start of 2024. The figure is updated daily on the U.S. Treasury site. Ten years earlier it was $22.99 trillion.
What the Number Means
Theoretically, the net debt per capital number means that each taxpayer would have to pay the government $3,100 if it had to pay off its debt in full. This is assuming, of course, that every citizen became liable for the outstanding debt of the country, which wouldn't happen in practice.
Net debt per capita is simply an indicator by which to measure a country's financial health rather than an actual approximation of individual liability.
Significance of Net Debt Per Capita
Net debt per capita is more commonly used for political statements than as an economic indicator in and of itself. Expressing the national debt in terms of a citizen's share makes it more real and relevant.
As of Jan. 6, 2024, the net debt per capita of the United States is $102,409. Countries with higher net debt per capita include the United Kingdom and The Netherlands. Japan has a relatively light debt load.
These figures are generally used in domestic politics to push for some change in fiscal policy. That said, net debt per capita may be plotted against per capita GDP to compare several regions around the world to determine the most promising areas to invest in internationally. However, the debt to GDP ratio is more commonly used for this purpose as it simplifies two data sets into a single plotted line for each country. This makes visualization and comparison much easier.
What Is the National Debt Per Capita of the U.S.?
The national debt of the U.S. is about $34 trillion as of the start of 2024.
The population of the U.S. is about 332 million.
That makes the national debt per capita of all Americans about $102,409.
Why Is the U.S. National Debt Rising So Rapidly?
The U.S. national debt stands at about $34 trillion as of early 2024. Ten years earlier, it was $22.99 trillion. . at the start of 2024. The figure is updated daily on the U.S. Treasury site. Ten years earlier it was $22.99 trillion. Much of the increase can be attributed to the coronavirus pandemic and the enormous amounts of government money spent by both President Donald Trump and President Joe Biden to stabilize the American economy and help citizens through the crisis.
Does Any Country Not Have National Debt?
Yes. Several nations have little or no debt. They include:
- Norway, which has vast oil and gas reserves.
- Singapore, a major financial center with a prosperous population.
- Russia. which has avoided debt since its 1998 bankruptcy.
The Bottom Line
National debt per capita is largely a political talking point. It helps communicate a government's level of indebtedness so that its citizens can understand it more fully.
Theoretically, every man, woman, and child in the U.S. would have to pay the U.S. government $102,409 to wipe out the national debt. Practically speaking, that's not going to happen.
FAQs
Net debt per capita is how much debt a government has per citizen. It is most often calculated at the national level, but it can also be applied to state and city governments. This number is sometimes used to help evaluate the default risk of a government's bonds as well as to assess its overall economic health.
Why is net debt important? ›
Net debt helps to determine whether a company is overleveraged or has too much debt given its liquid assets. A negative net debt implies that the company possesses more cash and cash equivalents than its financial obligations and is hence more financially stable.
What is the per capita debt of the United States? ›
In 2023, the gross federal debt in the United States amounted to around 93,500 U.S. dollars per capita. This is a moderate increase from the previous year, when the per capita national debt amounted to about 92,528 U.S. dollars.
What country has the most debt per capita? ›
List of countries by debt
| Country or territory | External debt (USD) |
|---|
| Per capita | % of GDP |
|---|
| United States of America | 77,707 | 122.65 |
| United Kingdom | 141,995 | 283.82 |
| Japan | 34,832 | 263.00 |
78 more rowsKey Takeaways: Net debt is the book value of a company's gross debt less any cash and cash-like assets on the balance sheet. Net debt shows how much debt a company has once it has paid all its debt obligations with its existing cash balances. Gross debt is the total book value of a company's debt obligations.
Is higher net debt good? ›
In most cases, a company's debt shouldn't exceed 60% (or a 0.6 ratio) long-term. Any company at this point usually has too much debt compared to its assets, suggesting that it's struggling to find income and make payments. Conversely, a company with less than 40% debt is usually in a good position.
Why is high net debt bad? ›
Higher net debt-to-EBITDA ratios are associated with a potential borrower faced with greater challenges in meeting financial obligations as they come due, such as interest payments and actual cash taxes.
What is the meaning of per capita debt? ›
Net debt per capita is how much debt a government has per citizen. It is most often calculated at the national level, but it can also be applied to state and city governments. This number is sometimes used to help evaluate the default risk of a government's bonds as well as to assess its overall economic health.
Which state is most in debt per capita? ›
U.S. per capita state and local government debt outstanding 2020, by state. In 2020, the federal state of New York had debt of around 18,566.13 U.S. dollars per capita, the most out of any state in the U.S. While not a state, the District of Columbia had an even higher per capita debt, at 29,339.48 U.S. dollars.
Which country owns the most US debt? ›
Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).
Top 5 States With the Least Debt
- Oklahoma: Least Indebted State. Score: 0 out of 100. The Sooner State has the fourth-lowest government debt in the nation at just $4,786.67 per capita. ...
- Iowa. Score: 4.65 out of 100. ...
- New Hampshire. Score: 17.44 out of 100. ...
- Nebraska. Score: 17.44 out of 100. ...
- Ohio. Score: 20.93 out of 100.
Download Table Data
| Country | National Debt (Million USD) | % of GDP |
|---|
| United States | $30.89 Mn | 121.31% |
| China | $13.77 Mn | 76.98% |
| Japan | $12.78 Mn | 255.07% |
| United Kingdom | $3.14 Mn | 101.86% |
68 more rowsMany people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S. This means that U.S. citizens own most of the national debt.
What is an example of a net debt? ›
Example Calculation of Net Debt
Current assets of Company A include $15,000 in cash, $10,000 in Treasury bills, and $15,000 in marketable securities. The net debt of Company A would be calculated as follows: Short-term debt: $10,000 + $30,000 = $40,000. Long-term debt: $50,000 + $50,000 = $100,000.
Is net debt equal to total debt? ›
Net debt is used to compare a company's total debt with its liquid assets and shows how much cash would remain once all debts have been paid off. Calculate net debt by adding together a company's short-term debt and long-term debt and then subtracting its cash and cash equivalents.
Does debt increase net income? ›
However, the biggest advantage commonly linked to debt is the benefit provided by financial leverage. This term refers to an organization's ability to increase reported net income by earning more money on borrowed funds than the associated cost of interest.
What is debt and why is it important? ›
Debt is something, usually money, owed by one party to another. Debt is used by many individuals and companies to make large purchases they could not afford under other circ*mstances.
What does debt to net worth tell you? ›
The debt to net worth ratio is a financial metric used in comparing the level of debt of a company with its net worth. It is an indication of the financial health of a company. The ratio helps investors to determine how much of a company's financing involves debt.
Why do we use net debt for WACC? ›
Net Debt. Many practitioners use net debt rather than total debt when calculating the weights for WACC. Net debt is the amount of debt that would remain if a company used all of its liquid assets to pay off as much debt as possible.
Why is good debt important? ›
By and large, good debt is borrowing that helps you build long-term wealth. Bad debt, on the other hand, can harm your credit and deplete your finances. The difference comes down to two factors: risk and cost.
