AdvisorShares Gerber Current Financial Leverage

GK Etf  USD 20.74  0.06  0.29%   
AdvisorShares Gerber holds a debt-to-equity ratio of 0.58. AdvisorShares Gerber's financial risk is the risk to AdvisorShares Gerber stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

AdvisorShares Gerber'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. AdvisorShares Gerber's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the ETF is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps AdvisorShares Etf's retail investors understand whether an upcoming fall or rise in the market will negatively affect AdvisorShares Gerber's stakeholders.
For most companies, including AdvisorShares Gerber, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running AdvisorShares Gerber Kawasaki the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Total Assets
20.2 M
Given that AdvisorShares Gerber's debt-to-equity ratio measures a ETF's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which AdvisorShares Gerber 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 AdvisorShares Gerber to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, AdvisorShares Gerber is said to be less leveraged. If creditors hold a majority of AdvisorShares Gerber's assets, the ETF is said to be highly leveraged.
  
Check out the analysis of AdvisorShares Gerber Fundamentals Over Time.

AdvisorShares Gerber Financial Leverage Rating

AdvisorShares Gerber Kawasaki bond ratings play a critical role in determining how much AdvisorShares Gerber 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 AdvisorShares Gerber's borrowing costs.

AdvisorShares Gerber Debt to Cash Allocation

As AdvisorShares Gerber Kawasaki follows its natural business cycle, the capital allocation decisions will not magically go away. AdvisorShares Gerber'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. Many companies 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.
The company reports 224.42 M of total liabilities with total debt to equity ratio (D/E) of 0.58, which is normal for its line of buisiness. AdvisorShares Gerber has a current ratio of 2.22, indicating that it is in good position to pay out its debt commitments in time. Debt can assist AdvisorShares Gerber until it has trouble settling it off, either with new capital or with free cash flow. So, AdvisorShares Gerber's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like AdvisorShares Gerber sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for AdvisorShares to invest in growth at high rates of return. When we think about AdvisorShares Gerber's use of debt, we should always consider it together with cash and equity.

AdvisorShares Gerber 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 AdvisorShares Gerber's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of AdvisorShares Gerber, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an AdvisorShares Gerber debt ratio should be compared their industry average or other competing firms.

Understaning AdvisorShares Gerber Use of Financial Leverage

AdvisorShares Gerber financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures AdvisorShares Gerber's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of AdvisorShares Gerber assets, the company is considered highly leveraged. Understanding the composition and structure of overall AdvisorShares Gerber debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to AdvisorShares Gerber's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of AdvisorShares Gerber's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
The fund primarily invests in U.S. exchange traded equity securities, including common and preferred stock and ADRs. Advisorshares Gerber is traded on NYSEARCA Exchange in the United States.
Please read more on our technical analysis page.

Building efficient market-beating portfolios requires time, education, and a lot of computing power!

The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.

Try AI Portfolio Architect
When determining whether AdvisorShares Gerber is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if AdvisorShares Etf is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Advisorshares Gerber Kawasaki Etf. Highlighted below are key reports to facilitate an investment decision about Advisorshares Gerber Kawasaki Etf:
Check out the analysis of AdvisorShares Gerber Fundamentals Over Time.
You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

Complementary Tools for AdvisorShares Etf analysis

When running AdvisorShares Gerber's price analysis, check to measure AdvisorShares Gerber's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy AdvisorShares Gerber is operating at the current time. Most of AdvisorShares Gerber's value examination focuses on studying past and present price action to predict the probability of AdvisorShares Gerber's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move AdvisorShares Gerber's price. Additionally, you may evaluate how the addition of AdvisorShares Gerber to your portfolios can decrease your overall portfolio volatility.
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Money Managers
Screen money managers from public funds and ETFs managed around the world
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
The market value of AdvisorShares Gerber is measured differently than its book value, which is the value of AdvisorShares that is recorded on the company's balance sheet. Investors also form their own opinion of AdvisorShares Gerber's value that differs from its market value or its book value, called intrinsic value, which is AdvisorShares Gerber'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 AdvisorShares Gerber's market value can be influenced by many factors that don't directly affect AdvisorShares Gerber'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 AdvisorShares Gerber's value and its price as these two are different measures arrived at by different means. Investors typically determine if AdvisorShares Gerber is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, AdvisorShares Gerber'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.