Toughbuilt Industries Current Debt

TBLT Stock  USD 3.05  0.02  0.66%   
Toughbuilt Industries holds a debt-to-equity ratio of 0.121. At this time, Toughbuilt Industries' Net Debt is comparatively stable compared to the past year. Short Term Debt is likely to gain to about 1.9 M in 2024, despite the fact that Net Debt To EBITDA is likely to grow to (0.06). Toughbuilt Industries' financial risk is the risk to Toughbuilt Industries stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Toughbuilt Industries' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Toughbuilt Industries' 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 Toughbuilt Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Toughbuilt Industries' stakeholders.
For most companies, including Toughbuilt Industries, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Toughbuilt Industries 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
0.2294
Book Value
14.564
Operating Margin
(0.51)
Profit Margin
(0.57)
Return On Assets
(0.42)
At this time, Toughbuilt Industries' Net Debt is comparatively stable compared to the past year. Short Term Debt is likely to gain to about 1.9 M in 2024, despite the fact that Net Debt To EBITDA is likely to grow to (0.06).
  
Check out the analysis of Toughbuilt Industries Fundamentals Over Time.
For more information on how to buy Toughbuilt Stock please use our How to Invest in Toughbuilt Industries guide.

Toughbuilt Industries Financial Leverage Rating

Toughbuilt Industries bond ratings play a critical role in determining how much Toughbuilt Industries 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 Toughbuilt Industries' borrowing costs.
Piotroski F Score
2  Frail
Beneish M Score

Toughbuilt Industries Debt to Cash Allocation

As Toughbuilt Industries follows its natural business cycle, the capital allocation decisions will not magically go away. Toughbuilt Industries' 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 currently holds 5.41 M in liabilities with Debt to Equity (D/E) ratio of 0.12, which may suggest the company is not taking enough advantage from borrowing. Toughbuilt Industries has a current ratio of 1.69, which is within standard range for the sector. Debt can assist Toughbuilt Industries until it has trouble settling it off, either with new capital or with free cash flow. So, Toughbuilt Industries' 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 Toughbuilt Industries sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Toughbuilt to invest in growth at high rates of return. When we think about Toughbuilt Industries' use of debt, we should always consider it together with cash and equity.

Toughbuilt Industries Total Assets Over Time

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

Toughbuilt Net Debt

Net Debt

2.69 Million

At this time, Toughbuilt Industries' Net Debt is comparatively stable compared to the past year.

Understaning Toughbuilt Industries Use of Financial Leverage

Toughbuilt Industries financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Toughbuilt Industries'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 Toughbuilt Industries assets, the company is considered highly leveraged. Understanding the composition and structure of overall Toughbuilt Industries 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 Toughbuilt Industries' 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 Toughbuilt Industries' 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 ReportedProjected for Next Year
Net Debt2.6 M2.7 M
Short and Long Term Debt Total6.2 M3.8 M
Long Term Debt 0.00  0.00 
Long Term Debt Total 0.00  0.00 
Short and Long Term Debt1.1 M1.1 M
Short Term Debt1.7 M1.9 M
Net Debt To EBITDA(0.07)(0.06)
Debt To Equity 0.16  0.17 
Interest Debt Per Share 83.07  78.91 
Debt To Assets 0.07  0.07 
Long Term Debt To Capitalization 0.09  0.1 
Total Debt To Capitalization 0.18  0.17 
Debt Equity Ratio 0.16  0.17 
Debt Ratio 0.07  0.07 
Cash Flow To Debt Ratio(7.93)(8.32)
Please read more on our technical analysis page.

Pair Trading with Toughbuilt Industries

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Toughbuilt Industries position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Toughbuilt Industries will appreciate offsetting losses from the drop in the long position's value.

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The ability to find closely correlated positions to Toughbuilt Industries could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Toughbuilt Industries when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Toughbuilt Industries - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Toughbuilt Industries to buy it.
The correlation of Toughbuilt Industries is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Toughbuilt Industries moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Toughbuilt Industries moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Toughbuilt Industries can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
When determining whether Toughbuilt Industries 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 Toughbuilt Stock 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 Toughbuilt Industries Stock. Highlighted below are key reports to facilitate an investment decision about Toughbuilt Industries Stock:
Check out the analysis of Toughbuilt Industries Fundamentals Over Time.
For more information on how to buy Toughbuilt Stock please use our How to Invest in Toughbuilt Industries guide.
You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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Is Toughbuilt Industries' 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 Toughbuilt Industries. If investors know Toughbuilt 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 Toughbuilt Industries listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share
(197.60)
Revenue Per Share
309.748
Quarterly Revenue Growth
(0.32)
Return On Assets
(0.42)
Return On Equity
(1.77)
The market value of Toughbuilt Industries is measured differently than its book value, which is the value of Toughbuilt that is recorded on the company's balance sheet. Investors also form their own opinion of Toughbuilt Industries' value that differs from its market value or its book value, called intrinsic value, which is Toughbuilt Industries' 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 Toughbuilt Industries' market value can be influenced by many factors that don't directly affect Toughbuilt Industries' 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 Toughbuilt Industries' value and its price as these two are different measures arrived at by different means. Investors typically determine if Toughbuilt Industries is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Toughbuilt Industries' 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.