Premium Catering Current Debt

PC Stock   0.83  0.01  1.19%   
Premium Catering holds a debt-to-equity ratio of 1.1. At present, Premium Catering's Long Term Debt is projected to decrease significantly based on the last few years of reporting. With a high degree of financial leverage come high-interest payments, which usually reduce Premium Catering's Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

Premium Catering'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. Premium Catering'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 Premium Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Premium Catering's stakeholders.
For most companies, including Premium Catering, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Premium Catering Limited, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Premium Catering's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Book Value
(0.02)
Operating Margin
(0.14)
Profit Margin
(0.16)
As of December 5, 2024, Total Current Liabilities is expected to decline to about 2.5 M. In addition to that, Non Current Liabilities Total is expected to decline to about 3.5 M
  
Check out the analysis of Premium Catering Fundamentals Over Time.

Premium Catering Financial Rating

Premium Catering Limited financial ratings play a critical role in determining how much Premium Catering 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 Premium Catering's borrowing costs.
Piotroski F Score
2
FrailView
Beneish M Score
(4.89)
Unlikely ManipulatorView

Premium Catering Debt to Cash Allocation

As Premium Catering Limited follows its natural business cycle, the capital allocation decisions will not magically go away. Premium Catering'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.
Premium Catering Limited reports 814.09 K of total liabilities with total debt to equity ratio (D/E) of 1.1, which is normal for its line of buisiness. Premium Catering has a current ratio of 0.97, implying that it has not enough working capital to pay out debt commitments in time. Note however, debt could still be an excellent tool for Premium to invest in growth at high rates of return.

Premium Catering Total Assets Over Time

Premium Catering 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 Premium Catering's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Premium Catering, which in turn will lower the firm's financial flexibility.

Premium Net Debt

Net Debt

1.56 Million

At present, Premium Catering's Net Debt is projected to decrease significantly based on the last few years of reporting.

Understaning Premium Catering Use of Financial Leverage

Premium Catering's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Premium Catering's total debt position, including all outstanding debt obligations, and compares it with Premium Catering's equity. Financial leverage can amplify the potential profits to Premium Catering's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Premium Catering is unable to cover its debt costs.
Last ReportedProjected for Next Year
Net Debt1.5 M1.6 M
Long Term Debt843.2 K994.8 K
Short and Long Term Debt732.7 K670.7 K
Please read more on our technical analysis page.

Also Currently Popular

Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.
Check out the analysis of Premium Catering Fundamentals Over Time.
You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Is Restaraunts Hotels Motels 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 Premium Catering. If investors know Premium 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 Premium Catering listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share
(0.04)
Revenue Per Share
0.272
Quarterly Revenue Growth
0.085
The market value of Premium Catering is measured differently than its book value, which is the value of Premium that is recorded on the company's balance sheet. Investors also form their own opinion of Premium Catering's value that differs from its market value or its book value, called intrinsic value, which is Premium Catering'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 Premium Catering's market value can be influenced by many factors that don't directly affect Premium Catering'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 Premium Catering's value and its price as these two are different measures arrived at by different means. Investors typically determine if Premium Catering is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Premium Catering'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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.