Plymouth Industrial Debt
| PLYM Stock | USD 18.82 0.05 0.27% |
Plymouth Industrial REIT holds a debt-to-equity ratio of 1.659. . Plymouth Industrial's financial risk is the risk to Plymouth Industrial stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Plymouth Industrial'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. Plymouth Industrial'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 Plymouth Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Plymouth Industrial's stakeholders.
For most companies, including Plymouth Industrial, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Plymouth Industrial REIT, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Plymouth Industrial's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Plymouth Industrial's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Plymouth Industrial is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Plymouth Industrial to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Plymouth Industrial is said to be less leveraged. If creditors hold a majority of Plymouth Industrial's assets, the Company is said to be highly leveraged.
Plymouth |
Plymouth Industrial Bond Ratings
Plymouth Industrial REIT financial ratings play a critical role in determining how much Plymouth Industrial 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 Plymouth Industrial's borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (2.54) | Unlikely Manipulator | View |
Plymouth Industrial REIT Debt to Cash Allocation
Many companies such as Plymouth Industrial, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Plymouth Industrial REIT currently holds 872.55 M in liabilities with Debt to Equity (D/E) ratio of 1.66, which is about average as compared to similar companies. Plymouth Industrial REIT has a current ratio of 0.79, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Plymouth Industrial's use of debt, we should always consider it together with its cash and equity.Plymouth Industrial 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 Plymouth Industrial's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Plymouth Industrial, which in turn will lower the firm's financial flexibility.Plymouth Industrial Corporate Bonds Issued
Understaning Plymouth Industrial Use of Financial Leverage
Leverage ratios show Plymouth Industrial's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Plymouth Industrial's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
Plymouth Industrial REIT, Inc. is a vertically integrated and self-managed real estate investment trust focused on the acquisition and operation of single and multi-tenant industrial properties located in secondary and select primary markets across the United States. The Company seeks to acquire properties that provide income and growth that enable the Company to leverage its real estate operating expertise to enhance shareholder value through active asset management, prudent property re-positioning and disciplined capital deployment. Plymouth Industrial operates under REITIndustrial classification in the United States and is traded on New York Stock Exchange. It employs people. Please read more on our technical analysis page.
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Is Diversified REITs 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 Plymouth Industrial. If investors know Plymouth 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 Plymouth Industrial listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Plymouth Industrial REIT is measured differently than its book value, which is the value of Plymouth that is recorded on the company's balance sheet. Investors also form their own opinion of Plymouth Industrial's value that differs from its market value or its book value, called intrinsic value, which is Plymouth Industrial'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 Plymouth Industrial's market value can be influenced by many factors that don't directly affect Plymouth Industrial'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 Plymouth Industrial's value and its price as these two are different measures arrived at by different means. Investors typically determine if Plymouth Industrial is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Plymouth Industrial'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.