Travel Leisure Debt
| TNL Stock | USD 43.70 0.27 0.62% |
Interest Debt Per Share is expected to rise to 78.11 this year, although the value of Short and Long Term Debt Total will most likely fall to about 5 B. Travel Leisure's financial risk is the risk to Travel Leisure stockholders that is caused by an increase in debt.
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.78524785 | Current Value 0.44 | Quarterly Volatility 0.21405387 |
Given that Travel Leisure'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 Travel Leisure 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 Travel Leisure to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Travel Leisure is said to be less leveraged. If creditors hold a majority of Travel Leisure's assets, the Company is said to be highly leveraged.
At this time, Travel Leisure's Liabilities And Stockholders Equity is quite stable compared to the past year. Total Current Liabilities is expected to rise to about 1.3 B this year, although the value of Non Current Liabilities Total will most likely fall to about 6.4 B. Travel |
Travel Leisure Bond Ratings
Travel Leisure Co bond ratings play a critical role in determining how much Travel Leisure 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 Travel Leisure's borrowing costs.| Piotroski F Score | 6 Healthy |
| Beneish M Score | -1.01 Possible Manipulator |
Travel Leisure Debt to Cash Allocation
As Travel Leisure Co follows its natural business cycle, the capital allocation decisions will not magically go away. Travel Leisure'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.
Travel Leisure Co has 5.73 B in debt. Travel Leisure has a current ratio of 2.74, 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 Travel to invest in growth at high rates of return. Travel Leisure Total Assets Over Time
Travel Leisure 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 Travel Leisure's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Travel Leisure, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Travel Leisure debt ratio should be compared their industry average or other competing firms.Travel Leisure Corporate Bonds Issued
Travel Leisure 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. Travel Leisure 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. Most Travel bonds can be classified according to their maturity, which is the date when Travel Leisure Co 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.
Travel Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Travel Leisure Use of Financial Leverage
Travel Leisure financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Travel Leisure'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 Travel Leisure assets, the company is considered highly leveraged. Understanding the composition and structure of overall Travel Leisure 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 Travel Leisure'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 Travel Leisure'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 | 5.7 B | 5 B | |
| Net Debt | 5.5 B | 4.7 B | |
| Long Term Debt | 5.6 B | 4.9 B | |
| Short Term Debt | 442 M | 366.8 M | |
| Long Term Debt Total | 6.5 B | 5.5 B | |
| Short and Long Term Debt | 294.4 M | 286.2 M | |
| Net Debt To EBITDA | 6.22 | 4.26 | |
| Debt To Equity | (5.76) | (5.48) | |
| Interest Debt Per Share | 74.39 | 78.11 | |
| Debt To Assets | 0.79 | 0.44 | |
| Long Term Debt To Capitalization | 1.19 | 0.62 | |
| Total Debt To Capitalization | 1.21 | 0.63 | |
| Debt Equity Ratio | (5.76) | (5.48) | |
| Debt Ratio | 0.79 | 0.44 | |
| Cash Flow To Debt Ratio | 0.07 | 0.06 |
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Additional Information and Resources on Investing in Travel Stock
When determining whether Travel Leisure is a strong investment it is important to analyze Travel Leisure's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Travel Leisure's future performance. For an informed investment choice regarding Travel Stock, refer to the following important reports:Check out the analysis of Travel Leisure Fundamentals Over Time. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Is Hotels, Resorts & Cruise Lines 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 Travel Leisure. If investors know Travel 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 Travel Leisure 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 0.118 | Dividend Share 1.85 | Earnings Share 5.32 | Revenue Per Share 51.877 | Quarterly Revenue Growth 0.042 |
The market value of Travel Leisure is measured differently than its book value, which is the value of Travel that is recorded on the company's balance sheet. Investors also form their own opinion of Travel Leisure's value that differs from its market value or its book value, called intrinsic value, which is Travel Leisure'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 Travel Leisure's market value can be influenced by many factors that don't directly affect Travel Leisure'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 Travel Leisure's value and its price as these two are different measures arrived at by different means. Investors typically determine if Travel Leisure is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Travel Leisure'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.