Tjk Machinery Tianjin 235822AB9 Bond
300823 Stock | 13.52 0.41 3.13% |
The current year's Short Term Debt is expected to grow to about 104.7 M, whereas Long Term Debt is forecasted to decline to about 4.4 M. With a high degree of financial leverage come high-interest payments, which usually reduce Tjk Machinery's Earnings Per Share (EPS).
As of December 25, 2024, Total Current Liabilities is expected to decline to about 225.3 M. In addition to that, Non Current Liabilities Total is expected to decline to about 19.4 MTjk |
Given the importance of Tjk Machinery's capital structure, the first step in the capital decision process is for the management of Tjk Machinery to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Tjk Machinery Tianjin to issue bonds at a reasonable cost.
Popular Name | Tjk Machinery Dana 575 percent |
Specialization | Specialty Industrial Machinery |
Equity ISIN Code | CNE100003SK0 |
Bond Issue ISIN Code | US235822AB96 |
S&P Rating | Others |
Maturity Date | 15th of April 2025 |
Issuance Date | 4th of April 2017 |
Coupon | 5.75 % |
Tjk Machinery Tianjin Outstanding Bond Obligations
Dana 575 percent | US235822AB96 | Details | |
Boeing Co 2196 | US097023DG73 | Details | |
Morgan Stanley 3591 | US61744YAK47 | Details | |
Morgan Stanley 3971 | US61744YAL20 | Details |
Understaning Tjk Machinery Use of Financial Leverage
Tjk Machinery's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Tjk Machinery's total debt position, including all outstanding debt obligations, and compares it with Tjk Machinery's equity. Financial leverage can amplify the potential profits to Tjk Machinery's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Tjk Machinery is unable to cover its debt costs.
Last Reported | Projected for Next Year | ||
Long Term Debt | 4.6 M | 4.4 M | |
Short Term Debt | 74.4 M | 104.7 M | |
Net Debt | 51.5 M | 46.2 M |
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Tjk Machinery financial ratios help investors to determine whether Tjk Stock is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Tjk with respect to the benefits of owning Tjk Machinery security.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.