ASM International Current Financial Leverage
| ASMIYDelisted Stock | USD 350.02 6.50 1.82% |
ASM International holds a debt-to-equity ratio of 0.007. 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).
Asset vs Debt
Equity vs Debt
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 OTC Stock is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps ASM OTC Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect ASM International's stakeholders.
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 that ASM International's debt-to-equity ratio measures a OTC Stock's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which ASM International 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 ASM International to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, ASM International is said to be less leveraged. If creditors hold a majority of ASM International's assets, the OTC Stock is said to be highly leveraged.
ASM |
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.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 17.75 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 2.59, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist ASM International until it has trouble settling it off, either with new capital or with free cash flow. So, ASM International'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 ASM International sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for ASM to invest in growth at high rates of return. When we think about ASM International's use of debt, we should always consider it together with cash and equity.ASM International 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 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, a an ASM International debt ratio should be compared their industry average or other competing firms.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. Financial leverage can amplify the potential profits to ASM International'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 ASM International'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).
ASM International NV, together with its subsidiaries, engages in the research, development, manufacture, marketing, and servicing of equipment and materials that are used to produce semiconductor devices in the United States, Europe, and Asia. ASM International NV was incorporated 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 OTC Exchange. It employs 3312 people. Please read more on our technical analysis page.
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.Moving together with ASM OTC Stock
| 0.77 | TRT | Trio Tech International | PairCorr |
Moving against ASM OTC Stock
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| 0.77 | AMBA | Ambarella Financial Report 4th of June 2024 | PairCorr |
| 0.73 | ACLS | Axcelis Technologies Financial Report 1st of May 2024 | PairCorr |
| 0.59 | IPGP | IPG Photonics Earnings Call This Week | PairCorr |
| 0.57 | PLAB | Photronics Financial Report 22nd of May 2024 | PairCorr |
The ability to find closely correlated positions to ASM International could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace ASM International 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 ASM International - 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 ASM International NV to buy it.
The correlation of ASM International 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 ASM International moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if ASM International 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 ASM International 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 Trending Equities to better understand how to build diversified portfolios. Also, note that the market value of any otc stock could be tightly coupled with the direction of predictive economic indicators such as signals in gross domestic product. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Consideration for investing in ASM OTC Stock
If you are still planning to invest in ASM International check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the ASM International's history and understand the potential risks before investing.
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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.