Taiwan Shin Current Debt
| 9925 Stock | TWD 41.85 0.05 0.12% |
Taiwan Shin Kong has over 77.96 Million in debt which may indicate that it relies heavily on debt financing. Taiwan Shin's financial risk is the risk to Taiwan Shin stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Taiwan Shin'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. Taiwan Shin'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 Taiwan Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Taiwan Shin's stakeholders.
For most companies, including Taiwan Shin, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Taiwan Shin Kong 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.
Given that Taiwan Shin'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 Taiwan Shin 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 Taiwan Shin to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Taiwan Shin is said to be less leveraged. If creditors hold a majority of Taiwan Shin's assets, the Company is said to be highly leveraged.
Taiwan |
Taiwan Shin Financial Leverage Rating
Taiwan Shin Kong bond ratings play a critical role in determining how much Taiwan Shin 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 Taiwan Shin's borrowing costs.Taiwan Shin Kong Debt to Cash Allocation
As Taiwan Shin Kong follows its natural business cycle, the capital allocation decisions will not magically go away. Taiwan Shin'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 accumulated 77.96 M in total debt with debt to equity ratio (D/E) of 15.4, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Taiwan Shin Kong has a current ratio of 1.66, which is within standard range for the sector. Debt can assist Taiwan Shin until it has trouble settling it off, either with new capital or with free cash flow. So, Taiwan Shin'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 Taiwan Shin Kong sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Taiwan to invest in growth at high rates of return. When we think about Taiwan Shin's use of debt, we should always consider it together with cash and equity.Taiwan Shin 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 Taiwan Shin's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Taiwan Shin, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Taiwan Shin debt ratio should be compared their industry average or other competing firms.Understaning Taiwan Shin Use of Financial Leverage
Taiwan Shin financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Taiwan Shin'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 Taiwan Shin assets, the company is considered highly leveraged. Understanding the composition and structure of overall Taiwan Shin 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 Taiwan Shin'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 Taiwan Shin'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).
,Ltd. provides family preservation and corporate security services. The company was founded in 1980 and is based in Taipei City, Taiwan. TAIWAN SOGO is traded on Taiwan Stock Exchange in Taiwan. Please read more on our technical analysis page.
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When running Taiwan Shin's price analysis, check to measure Taiwan Shin'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 Taiwan Shin is operating at the current time. Most of Taiwan Shin's value examination focuses on studying past and present price action to predict the probability of Taiwan Shin's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Taiwan Shin's price. Additionally, you may evaluate how the addition of Taiwan Shin to your portfolios can decrease your overall portfolio volatility.
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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.