Wheaton Precious Metals Corporate Bonds and Leverage Analysis
| WPM Stock | USD 62.33 0.59 0.96% |
As of the 1st of December 2024, Net Debt is likely to grow to about (513.3 M). In addition to that, Short and Long Term Debt Total is likely to drop to about 5.9 M. Wheaton Precious' financial risk is the risk to Wheaton Precious stockholders that is caused by an increase in debt.
Debt Ratio | First Reported 2010-12-31 | Previous Quarter (0) | Current Value (0) | Quarterly Volatility 0.09677019 |
Wheaton |
Given the importance of Wheaton Precious' capital structure, the first step in the capital decision process is for the management of Wheaton Precious 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 Wheaton Precious Metals to issue bonds at a reasonable cost.
Wheaton Precious Bond Ratings
Wheaton Precious Metals financial ratings play a critical role in determining how much Wheaton Precious 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 Wheaton Precious' borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (146.10) | Unlikely Manipulator | View |
Wheaton Precious Metals Debt to Cash Allocation
Many companies such as Wheaton Precious, 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.
Wheaton Precious Metals has 6.23 M in debt. Wheaton Precious Metals has a current ratio of 20.87, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Wheaton to invest in growth at high rates of return. Wheaton Precious Total Assets Over Time
Wheaton Precious 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 Wheaton Precious' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Wheaton Precious, which in turn will lower the firm's financial flexibility.Wheaton Precious Corporate Bonds Issued
Wheaton Precious issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Wheaton Precious Metals uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt.
Wheaton Net Debt
Understaning Wheaton Precious Use of Financial Leverage
Leverage ratios show Wheaton Precious' 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 Wheaton Precious' 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).
| Last Reported | Projected for Next Year | ||
| Net Debt | -540.3 M | -513.3 M | |
| Short and Long Term Debt Total | 6.2 M | 5.9 M | |
| Short Term Debt | 604 K | 573.8 K | |
| Short and Long Term Debt | 885.5 M | 746 M | |
| Long Term Debt Total | 1 M | 985 K | |
| Net Debt To EBITDA | (0.72) | (0.68) | |
| Interest Debt Per Share | 0.01 | 0.01 | |
| Long Term Debt To Capitalization | 0.04 | 0.04 | |
| Cash Flow To Debt Ratio | (65.64) | (62.36) |
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Is Metals & Mining 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 Wheaton Precious. If investors know Wheaton 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 Wheaton Precious 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 0.323 | Dividend Share 0.615 | Earnings Share 1.34 | Revenue Per Share 2.686 | Quarterly Revenue Growth 0.381 |
The market value of Wheaton Precious Metals is measured differently than its book value, which is the value of Wheaton that is recorded on the company's balance sheet. Investors also form their own opinion of Wheaton Precious' value that differs from its market value or its book value, called intrinsic value, which is Wheaton Precious' 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 Wheaton Precious' market value can be influenced by many factors that don't directly affect Wheaton Precious' 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 Wheaton Precious' value and its price as these two are different measures arrived at by different means. Investors typically determine if Wheaton Precious is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Wheaton Precious' 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.