ASM INTERNATIONAL Current Financial Leverage

ASMIY -  USA Stock  

USD 441.00  0.80  0.18%

ASM INTERNATIONAL's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. ASM INTERNATIONAL's financial risk is the risk to ASM INTERNATIONAL 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).
Please continue to the analysis of ASM INTERNATIONAL Fundamentals Over Time.

ASMIY Bonds 

 
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ASM INTERNATIONAL Total Debt is fairly stable at the moment as compared to the past year. ASM INTERNATIONAL reported Total Debt of 92.72 Million in 2020. Debt Non Current is likely to rise to about 14.9 M in 2021, whereas Debt Current is likely to drop slightly above 49.6 M in 2021.

ASMIY Current Financial Burden

ASM INTERNATIONAL'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. ASM INTERNATIONAL'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 ASMIY Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect ASM INTERNATIONAL's stakeholders.

Asset vs Debt

Equity vs Debt

For most companies, including ASM INTERNATIONAL, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running ASM INTERNATIONAL NV 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 the importance of ASM INTERNATIONAL's capital structure, the first step in the capital decision process is for the management of ASM INTERNATIONAL to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of ASM INTERNATIONAL NV to issue bonds at a reasonable cost.

ASM INTERNATIONAL Financial Leverage Rating

ASM INTERNATIONAL NV bond ratings play a critical role in determining how much ASM INTERNATIONAL 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 ASM INTERNATIONAL's borrowing costs.
Overall Bond Rating
Not Rated
Average S&P Rating
N/A
Piotroski F Score
4  Poor
Beneish M Score

ASM INTERNATIONAL Debt to Cash Allocation

As ASM INTERNATIONAL NV follows its natural business cycle, the capital allocation decisions will not magically go away. ASM INTERNATIONAL'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 12.51 M in total debt with debt to equity ratio (D/E) of 0.01, which may suggest the company is not taking enough advantage from borrowing. ASM INTERNATIONAL has a current ratio of 2.93, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due.

ASM INTERNATIONAL Accumulated Other Comprehensive Income Over Time

ASM INTERNATIONAL Assets Financed by Debt

The debt-to-assets ratio shows the degree to which ASM INTERNATIONAL uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

ASM INTERNATIONAL Debt Ratio

    
  7.28   
It appears most of the ASM INTERNATIONAL's assets are financed through equity. 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 ASM INTERNATIONAL's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of ASM INTERNATIONAL, which in turn will lower the firm's financial flexibility. Like all other financial ratios, an ASM INTERNATIONAL debt ratio should be compared their industry average or other competing firms.
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ASM INTERNATIONAL Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of ASM INTERNATIONAL, understanding its historical liability is critical in projecting ASM INTERNATIONAL's future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how ASM INTERNATIONAL uses its financing power over time.
In order to fund their growth, businesses such as ASM INTERNATIONAL widely use Financial Leverage. For most companies, financial capital is raised by issuing debt securities and by selling common stock. The debt and equity that make up ASM INTERNATIONAL's capital structure have many risks and return implications. Leverage is an investment strategy of using borrowed money to increase the potential return of an investment. Please note, 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.

Understaning ASM INTERNATIONAL Use of Financial Leverage

ASM INTERNATIONAL financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures ASM INTERNATIONAL'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 ASM INTERNATIONAL assets, the company is considered highly leveraged. Understanding the composition and structure of overall ASM INTERNATIONAL 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.
Last ReportedProjected for 2021
Total Debt92.7 M95.2 M
Debt Current61.2 M49.6 M
Debt Non Current14.5 M14.9 M
Issuance Repayment of Debt Securities-25.2 M-25.9 M
Debt to Equity Ratio 0.09  0.1 
ASM International NV, together with its subsidiaries, engages in the research, development, manufacture, marketing, and servicing of equipment and materials used to produce semiconductor devices. ASM International NV was founded in 1968 and is headquartered in Almere, the Netherlands. ASM INTERNATIONAL operates under Semiconductor Equipment Materials classification in the United States and is traded on NASDAQ Exchange. It employs 2780 people.
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ASM INTERNATIONAL Investors Sentiment

The influence of ASM INTERNATIONAL's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in ASMIY. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.
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 ASM INTERNATIONAL 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, ASM INTERNATIONAL's short interest history, or implied volatility extrapolated from ASM INTERNATIONAL options trading.

Current Sentiment - ASMIY

ASM INTERNATIONAL Investor Sentiment

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Pair Trading with ASM INTERNATIONAL

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 ASM INTERNATIONAL 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 ASM INTERNATIONAL will appreciate offsetting losses from the drop in the long position's value.

ASM INTERNATIONAL Pair Correlation

Equities Pair Trading Analysis

Correlation analysis and pair trading evaluation for ASM INTERNATIONAL and Daqo New Energy. Pair trading can be used as a hedging technique within a particular sector or industry or even over random equities to generate better risk-adjusted return
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Please continue to the analysis of ASM INTERNATIONAL Fundamentals Over Time. Note that the ASM INTERNATIONAL information on this page should be used as a complementary analysis to other ASM INTERNATIONAL'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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Complementary Tools for ASMIY Stock analysis

When running ASM INTERNATIONAL price analysis, check to measure ASM INTERNATIONAL'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 ASM INTERNATIONAL is operating at the current time. Most of ASM INTERNATIONAL's value examination focuses on studying past and present price action to predict the probability of ASM INTERNATIONAL's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move ASM INTERNATIONAL's price. Additionally, you may evaluate how the addition of ASM INTERNATIONAL to your portfolios can decrease your overall portfolio volatility.
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Is ASM INTERNATIONAL's 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 ASM INTERNATIONAL. If investors know ASMIY 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 ASM INTERNATIONAL listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of ASM INTERNATIONAL is measured differently than its book value, which is the value of ASMIY that is recorded on the company's balance sheet. Investors also form their own opinion of ASM INTERNATIONAL's value that differs from its market value or its book value, called intrinsic value, which is ASM INTERNATIONAL'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 ASM INTERNATIONAL's market value can be influenced by many factors that don't directly affect ASM INTERNATIONAL'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 ASM INTERNATIONAL's value and its price as these two are different measures arrived at by different means. Investors typically determine ASM INTERNATIONAL value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, ASM INTERNATIONAL'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.
  • 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.