Yulon Finance Current Financial Leverage
9941 Stock | TWD 144.50 1.00 0.69% |
Yulon Finance Corp has over 2.87 Billion in debt which may indicate that it relies heavily on debt financing. Yulon Finance's financial risk is the risk to Yulon Finance 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
Yulon Finance'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. Yulon Finance'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 Yulon Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Yulon Finance's stakeholders.
For most companies, including Yulon Finance, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Yulon Finance Corp 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 Yulon Finance'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 Yulon Finance 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 Yulon Finance to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Yulon Finance is said to be less leveraged. If creditors hold a majority of Yulon Finance's assets, the Company is said to be highly leveraged.
Yulon |
Yulon Finance Financial Leverage Rating
Yulon Finance Corp bond ratings play a critical role in determining how much Yulon Finance 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 Yulon Finance's borrowing costs.Yulon Finance Corp Debt to Cash Allocation
As Yulon Finance Corp follows its natural business cycle, the capital allocation decisions will not magically go away. Yulon Finance'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 2.87 B in total debt with debt to equity ratio (D/E) of 7.76, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Yulon Finance Corp has a current ratio of 1.0, suggesting that it is in a questionable position to pay out its financial obligations in time and when they become due. Debt can assist Yulon Finance until it has trouble settling it off, either with new capital or with free cash flow. So, Yulon Finance'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 Yulon Finance Corp sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Yulon to invest in growth at high rates of return. When we think about Yulon Finance's use of debt, we should always consider it together with cash and equity.Yulon Finance 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 Yulon Finance's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Yulon Finance, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Yulon Finance debt ratio should be compared their industry average or other competing firms.Understaning Yulon Finance Use of Financial Leverage
Yulon Finance financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Yulon Finance'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 Yulon Finance assets, the company is considered highly leveraged. Understanding the composition and structure of overall Yulon Finance 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 Yulon Finance'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 Yulon Finance'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).
Yulon Finance Corporation provides various financial services in Taiwan, China, and internationally. Yulon Finance Corporation was incorporated in 1990 and is based in Taipei, Taiwan. YULON FINANCE is traded on Taiwan Stock Exchange in Taiwan. Please read more on our technical analysis page.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Yulon Finance in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Yulon Finance's short interest history, or implied volatility extrapolated from Yulon Finance options trading.
Thematic Opportunities
Explore Investment Opportunities
Check out the analysis of Yulon Finance Fundamentals Over Time. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Complementary Tools for Yulon Stock analysis
When running Yulon Finance's price analysis, check to measure Yulon Finance'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 Yulon Finance is operating at the current time. Most of Yulon Finance's value examination focuses on studying past and present price action to predict the probability of Yulon Finance's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Yulon Finance's price. Additionally, you may evaluate how the addition of Yulon Finance to your portfolios can decrease your overall portfolio volatility.
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |
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.