TransAlta Corp Debt
| TAC Stock | USD 11.09 0.22 2.02% |
TransAlta Corp holds a debt-to-equity ratio of 1.582. At present, TransAlta Corp's Debt To Equity is projected to increase slightly based on the last few years of reporting. The current year's Interest Debt Per Share is expected to grow to 17.69, whereas Short and Long Term Debt Total is forecasted to decline to about 3.8 B. With a high degree of financial leverage come high-interest payments, which usually reduce TransAlta Corp's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
TransAlta Corp'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. TransAlta Corp'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 TransAlta Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect TransAlta Corp's stakeholders.
TransAlta Corp Quarterly Net Debt |
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For most companies, including TransAlta Corp, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for TransAlta Corp, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, TransAlta Corp'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 5.1469 | Book Value 2.921 | Operating Margin 0.1473 | Profit Margin 0.0749 | Return On Assets 0.042 |
Given that TransAlta Corp'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 TransAlta Corp 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 TransAlta Corp to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, TransAlta Corp is said to be less leveraged. If creditors hold a majority of TransAlta Corp's assets, the Company is said to be highly leveraged.
At present, TransAlta Corp's Non Current Liabilities Total is projected to increase significantly based on the last few years of reporting. The current year's Change To Liabilities is expected to grow to about 661.7 M, whereas Total Current Liabilities is forecasted to decline to about 1.5 B. TransAlta |
TransAlta Corp Bond Ratings
TransAlta Corp financial ratings play a critical role in determining how much TransAlta Corp 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 TransAlta Corp's borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (1.96) | Possible Manipulator | View |
TransAlta Corp Debt to Cash Allocation
As TransAlta Corp follows its natural business cycle, the capital allocation decisions will not magically go away. TransAlta Corp'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.
TransAlta Corp has 4.21 B in debt with debt to equity (D/E) ratio of 1.58, which is OK given its current industry classification. TransAlta Corp has a current ratio of 1.1, demonstrating that it may have difficulties to pay its financial commitments when the payables are due. Note however, debt could still be an excellent tool for TransAlta to invest in growth at high rates of return. TransAlta Corp Common Stock Shares Outstanding Over Time
TransAlta Corp Assets Financed by Debt
The debt-to-assets ratio shows the degree to which TransAlta Corp uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.TransAlta Corp Debt Ratio | 32.0 |
TransAlta Corp Corporate Bonds Issued
Most TransAlta bonds can be classified according to their maturity, which is the date when TransAlta Corp 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.
TransAlta Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning TransAlta Corp Use of Financial Leverage
TransAlta Corp's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures TransAlta Corp's total debt position, including all outstanding debt obligations, and compares it with TransAlta Corp's equity. Financial leverage can amplify the potential profits to TransAlta Corp's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if TransAlta Corp is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 4.2 B | 3.8 B | |
| Net Debt | 3.8 B | 3.5 B | |
| Short Term Debt | 535 M | 367.7 M | |
| Long Term Debt | 3.5 B | 3.1 B | |
| Short and Long Term Debt | 529 M | 380 M | |
| Long Term Debt Total | 4.8 B | 3.8 B | |
| Net Debt To EBITDA | 2.26 | 4.10 | |
| Debt To Equity | 2.65 | 2.78 | |
| Interest Debt Per Share | 15.51 | 17.69 | |
| Debt To Assets | 0.47 | 0.32 | |
| Long Term Debt To Capitalization | 0.70 | 0.43 | |
| Total Debt To Capitalization | 0.73 | 0.46 | |
| Debt Equity Ratio | 2.65 | 2.78 | |
| Debt Ratio | 0.47 | 0.32 | |
| Cash Flow To Debt Ratio | 0.36 | 0.38 |
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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.When determining whether TransAlta Corp offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of TransAlta Corp's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Transalta Corp Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Transalta Corp Stock:Check out the analysis of TransAlta Corp Fundamentals Over Time. For information on how to trade TransAlta Stock refer to our How to Trade TransAlta Stock guide.You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Is Independent Power and Renewable Electricity Producers 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 TransAlta Corp. If investors know TransAlta 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 TransAlta Corp 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 (0.21) | Dividend Share 0.235 | Earnings Share 0.27 | Revenue Per Share 9.166 | Quarterly Revenue Growth (0.37) |
The market value of TransAlta Corp is measured differently than its book value, which is the value of TransAlta that is recorded on the company's balance sheet. Investors also form their own opinion of TransAlta Corp's value that differs from its market value or its book value, called intrinsic value, which is TransAlta Corp'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 TransAlta Corp's market value can be influenced by many factors that don't directly affect TransAlta Corp'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 TransAlta Corp's value and its price as these two are different measures arrived at by different means. Investors typically determine if TransAlta Corp is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, TransAlta Corp'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.