Aberdeen Global Current Financial Leverage
| AGD Fund | USD 9.17 0.03 0.33% |
Aberdeen Global Dynamic holds a debt-to-equity ratio of 0.049. Aberdeen Global's financial risk is the risk to Aberdeen Global 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).
Given that Aberdeen Global's debt-to-equity ratio measures a Fund's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Aberdeen Global 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 Aberdeen Global to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Aberdeen Global is said to be less leveraged. If creditors hold a majority of Aberdeen Global's assets, the Fund is said to be highly leveraged.
Aberdeen |
Aberdeen Global Financial Leverage Rating
Aberdeen Global Dynamic bond ratings play a critical role in determining how much Aberdeen Global 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 Aberdeen Global's borrowing costs.Aberdeen Global Dynamic Debt to Cash Allocation
As Aberdeen Global Dynamic follows its natural business cycle, the capital allocation decisions will not magically go away. Aberdeen Global'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 7.06 M in debt with debt to equity (D/E) ratio of 0.05, which may show that the company is not taking advantage of profits from borrowing. Aberdeen Global Dynamic has a current ratio of 0.51, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist Aberdeen Global until it has trouble settling it off, either with new capital or with free cash flow. So, Aberdeen Global'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 Aberdeen Global Dynamic sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Aberdeen to invest in growth at high rates of return. When we think about Aberdeen Global's use of debt, we should always consider it together with cash and equity.Aberdeen Global 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 Aberdeen Global's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Aberdeen Global, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an Aberdeen Global debt ratio should be compared their industry average or other competing firms.Understaning Aberdeen Global Use of Financial Leverage
Aberdeen Global financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Aberdeen Global'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 Aberdeen Global assets, the company is considered highly leveraged. Understanding the composition and structure of overall Aberdeen Global 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 Aberdeen Global'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 Aberdeen Global'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).
Abrdn Global Dynamic Dividend Fund is a closed ended equity mutual fund launched and managed by Alpine Woods Capital Investors, LLC. Abrdn Global Dynamic Dividend Fund was formed on May 11, 2006 and is domiciled in the United States. Abrdn Global is traded on New York Stock Exchange in the United States. Please read more on our technical analysis page.
Pair Trading with Aberdeen Global
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 Aberdeen Global 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 Aberdeen Global will appreciate offsetting losses from the drop in the long position's value.Moving together with Aberdeen Fund
| 0.81 | DNP | Dnp Select Me | PairCorr |
| 0.75 | VVR | Invesco Senior Me | PairCorr |
| 0.83 | NTG | Tortoise Mlp Closed | PairCorr |
| 0.7 | NEA | Nuveen Amt Free | PairCorr |
Moving against Aberdeen Fund
| 0.64 | AWRRF | Aw Revenue Royalties | PairCorr |
The ability to find closely correlated positions to Aberdeen Global could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Aberdeen Global 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 Aberdeen Global - 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 Aberdeen Global Dynamic to buy it.
The correlation of Aberdeen Global 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 Aberdeen Global moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Aberdeen Global Dynamic 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 Aberdeen Global 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.Check out the analysis of Aberdeen Global Fundamentals Over Time. Note that the Aberdeen Global Dynamic information on this page should be used as a complementary analysis to other Aberdeen Global's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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.