LG Display Current Financial Leverage
| LPL Stock | USD 3.79 0.01 0.26% |
LG Display holds a debt-to-equity ratio of 0.962. At this time, LG Display's Net Debt To EBITDA is quite stable compared to the past year. Debt To Equity is expected to rise to 2.41 this year, although the value of Long Term Debt Total will most likely fall to about 8.1 T. LG Display's financial risk is the risk to LG Display 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
LG Display'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. LG Display'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 LPL Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect LG Display's stakeholders.
LG Display Quarterly Net Debt |
|
For most companies, including LG Display, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running LG Display Co 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.
Price Book 0.7003 | Book Value 20.2 K | Operating Margin 0.0178 | Profit Margin (0.13) | Return On Assets (0.04) |
Given that LG Display'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 LG Display 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 LG Display to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, LG Display is said to be less leveraged. If creditors hold a majority of LG Display's assets, the Company is said to be highly leveraged.
At this time, LG Display's Net Debt To EBITDA is quite stable compared to the past year. Debt To Equity is expected to rise to 2.41 this year, although the value of Long Term Debt Total will most likely fall to about 8.1 T. LPL |
LG Display Financial Leverage Rating
LG Display Co bond ratings play a critical role in determining how much LG Display 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 LG Display's borrowing costs.| Piotroski F Score | 5 Healthy |
| Beneish M Score | -4.33 Unlikely Manipulator |
LG Display Debt to Cash Allocation
As LG Display Co follows its natural business cycle, the capital allocation decisions will not magically go away. LG Display'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 has 16.6 T in debt with debt to equity (D/E) ratio of 0.96, which is OK given its current industry classification. LG Display has a current ratio of 0.88, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist LG Display until it has trouble settling it off, either with new capital or with free cash flow. So, LG Display'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 LG Display sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for LPL to invest in growth at high rates of return. When we think about LG Display's use of debt, we should always consider it together with cash and equity.LG Display Total Assets Over Time
LG Display 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 LG Display's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of LG Display, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a LG Display debt ratio should be compared their industry average or other competing firms.LPL Short Long Term Debt Total
Short Long Term Debt Total |
|
Understaning LG Display Use of Financial Leverage
LG Display financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures LG Display'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 LG Display assets, the company is considered highly leveraged. Understanding the composition and structure of overall LG Display 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 LG Display'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 LG Display'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).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 16.6 T | 17.4 T | |
| Net Debt | 14.3 T | 15.1 T | |
| Short Term Debt | 5.2 T | 5.5 T | |
| Long Term Debt | 11 T | 11.5 T | |
| Short and Long Term Debt | 6.2 T | 6.6 T | |
| Long Term Debt Total | 11 T | 8.1 T | |
| Net Debt To EBITDA | 8.42 | 8.84 | |
| Debt To Equity | 2.29 | 2.41 | |
| Interest Debt Per Share | 45.1 K | 47.3 K | |
| Debt To Assets | 0.46 | 0.49 | |
| Long Term Debt To Capitalization | 0.61 | 0.64 | |
| Total Debt To Capitalization | 0.70 | 0.73 | |
| Debt Equity Ratio | 2.29 | 2.41 | |
| Debt Ratio | 0.46 | 0.49 | |
| Cash Flow To Debt Ratio | 0.10 | 0.1 |
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 ArchitectCheck out the analysis of LG Display Fundamentals Over Time. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Complementary Tools for LPL Stock analysis
When running LG Display's price analysis, check to measure LG Display'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 LG Display is operating at the current time. Most of LG Display's value examination focuses on studying past and present price action to predict the probability of LG Display's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move LG Display's price. Additionally, you may evaluate how the addition of LG Display to your portfolios can decrease your overall portfolio volatility.
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |
Is LG Display's industry 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 LG Display. If investors know LPL 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 LG Display 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 (0.76) | Earnings Share (2.70) | Revenue Per Share 29.8 K | Quarterly Revenue Growth 0.013 | Return On Assets (0.04) |
The market value of LG Display is measured differently than its book value, which is the value of LPL that is recorded on the company's balance sheet. Investors also form their own opinion of LG Display's value that differs from its market value or its book value, called intrinsic value, which is LG Display'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 LG Display's market value can be influenced by many factors that don't directly affect LG Display'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 LG Display's value and its price as these two are different measures arrived at by different means. Investors typically determine if LG Display is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, LG Display'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.