Associated Capital Corporate Bonds and Leverage Analysis
| AC Stock | USD 36.29 0.10 0.28% |
Associated Capital holds a debt-to-equity ratio of 0.11. At present, Associated Capital's Long Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Interest Debt Per Share is expected to grow to 0.03, whereas Net Debt is forecasted to decline to (333.4 M). With a high degree of financial leverage come high-interest payments, which usually reduce Associated Capital's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Associated Capital's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Associated Capital's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Associated Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Associated Capital's stakeholders.
For most companies, including Associated Capital, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Associated Capital Group, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Associated Capital's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 0.8632 | Book Value 41.966 | Operating Margin (2.86) | Profit Margin 4.129 | Return On Assets (0.01) |
Associated |
Given the importance of Associated Capital's capital structure, the first step in the capital decision process is for the management of Associated Capital 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 Associated Capital Group to issue bonds at a reasonable cost.
Associated Capital Bond Ratings
Associated Capital Group financial ratings play a critical role in determining how much Associated Capital have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Associated Capital's borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (2.34) | Unlikely Manipulator | View |
Associated Capital Debt to Cash Allocation
As Associated Capital Group follows its natural business cycle, the capital allocation decisions will not magically go away. Associated Capital's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Associated Capital Group reports 6.5 M of total liabilities with total debt to equity ratio (D/E) of 0.11, which may suggest the company is not taking enough advantage from financial leverage. Associated Capital has a current ratio of 20.52, indicating that it is in good position to pay out its debt commitments in time. Note however, debt could still be an excellent tool for Associated to invest in growth at high rates of return. Associated Capital Common Stock Shares Outstanding Over Time
Associated Capital Assets Financed by Debt
Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Associated Capital's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Associated Capital, which in turn will lower the firm's financial flexibility.Associated Capital Corporate Bonds Issued
Most Associated bonds can be classified according to their maturity, which is the date when Associated Capital Group has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Associated Net Debt
Net Debt |
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Understaning Associated Capital Use of Financial Leverage
Associated Capital's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Associated Capital's total debt position, including all outstanding debt obligations, and compares it with Associated Capital's equity. Financial leverage can amplify the potential profits to Associated Capital's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Associated Capital is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Net Debt | -317.5 M | -333.4 M | |
| Short and Long Term Debt Total | 6.5 M | 8.9 M | |
| Short Term Debt | 2.6 M | 2.5 M | |
| Long Term Debt | 6.1 M | 6.4 M | |
| Net Debt To EBITDA | (11.76) | (11.17) | |
| Interest Debt Per Share | 0.02 | 0.03 |
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Is Asset Management & Custody Banks space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Associated Capital. If investors know Associated will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Associated Capital listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.07) | Dividend Share 0.1 | Earnings Share 2.62 | Revenue Per Share 0.637 | Quarterly Revenue Growth 0.098 |
The market value of Associated Capital is measured differently than its book value, which is the value of Associated that is recorded on the company's balance sheet. Investors also form their own opinion of Associated Capital's value that differs from its market value or its book value, called intrinsic value, which is Associated Capital's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Associated Capital's market value can be influenced by many factors that don't directly affect Associated Capital's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Associated Capital's value and its price as these two are different measures arrived at by different means. Investors typically determine if Associated Capital is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Associated Capital's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
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.