Global Water Current Financial Leverage
GWRS Stock | USD 12.44 0.31 2.56% |
Global Water Resources has over 108.91 Million in debt which may indicate that it relies heavily on debt financing. At this time, Global Water's Short and Long Term Debt is comparatively stable compared to the past year. Short Term Debt is likely to gain to about 4.1 M in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 91.4 M in 2024. Global Water's financial risk is the risk to Global Water 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
Global Water'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. Global Water'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 Global Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Global Water's stakeholders.
Global Water Quarterly Net Debt |
|
For most companies, including Global Water, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Global Water Resources 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.
Price Book 6.1109 | Book Value 2.011 | Operating Margin 0.1344 | Profit Margin 0.1505 | Return On Assets 0.0224 |
Given that Global Water'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 Global Water 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 Global Water to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Global Water is said to be less leveraged. If creditors hold a majority of Global Water's assets, the Company is said to be highly leveraged.
At this time, Global Water's Short and Long Term Debt is comparatively stable compared to the past year. Short Term Debt is likely to gain to about 4.1 M in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 91.4 M in 2024. Global |
Global Water Financial Leverage Rating
Global Water Resources bond ratings play a critical role in determining how much Global Water 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 Global Water's borrowing costs.Piotroski F Score | 8 Strong |
Beneish M Score | -2.75 Unlikely Manipulator |
Global Water Resources Debt to Cash Allocation
As Global Water Resources follows its natural business cycle, the capital allocation decisions will not magically go away. Global Water'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 currently holds 108.91 M in liabilities with Debt to Equity (D/E) ratio of 3.76, implying the company greatly relies on financing operations through barrowing. Global Water Resources has a current ratio of 0.74, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist Global Water until it has trouble settling it off, either with new capital or with free cash flow. So, Global Water'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 Global Water Resources sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Global to invest in growth at high rates of return. When we think about Global Water's use of debt, we should always consider it together with cash and equity.Global Water Total Assets Over Time
Global Water 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 Global Water's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Global Water, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Global Water debt ratio should be compared their industry average or other competing firms.Global Long Term Debt
Long Term Debt |
|
Understaning Global Water Use of Financial Leverage
Global Water financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Global Water'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 Global Water assets, the company is considered highly leveraged. Understanding the composition and structure of overall Global Water 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 Global Water'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 Global Water'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).
Last Reported | Projected for Next Year | ||
Long Term Debt | 103.7 M | 94.8 M | |
Short and Long Term Debt | 3.9 M | 4.1 M | |
Short Term Debt | 3.9 M | 4.1 M | |
Short and Long Term Debt Total | 108.9 M | 91.4 M | |
Net Debt | 105.8 M | 83 M | |
Long Term Debt Total | 125.3 M | 122.9 M | |
Net Debt To EBITDA | 4.42 | 4.33 | |
Debt To Equity | 2.22 | 2.11 | |
Interest Debt Per Share | 4.70 | 6.41 | |
Debt To Assets | 0.30 | 0.45 | |
Long Term Debt To Capitalization | 0.68 | 0.88 | |
Total Debt To Capitalization | 0.69 | 0.88 | |
Debt Equity Ratio | 2.22 | 2.11 | |
Debt Ratio | 0.30 | 0.45 | |
Cash Flow To Debt Ratio | 0.23 | 0.25 |
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 Global Water 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, Global Water's short interest history, or implied volatility extrapolated from Global Water options trading.
Building efficient market-beating portfolios requires time, education, and a lot of computing power!
The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.
Try AI Portfolio ArchitectCheck out the analysis of Global Water Fundamentals Over Time. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Complementary Tools for Global Stock analysis
When running Global Water's price analysis, check to measure Global Water'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 Global Water is operating at the current time. Most of Global Water's value examination focuses on studying past and present price action to predict the probability of Global Water's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Global Water's price. Additionally, you may evaluate how the addition of Global Water to your portfolios can decrease your overall portfolio volatility.
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |
Is Global Water'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 Global Water. If investors know Global 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 Global Water listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.26 | Dividend Share 0.301 | Earnings Share 0.33 | Revenue Per Share 2.205 | Quarterly Revenue Growth 0.114 |
The market value of Global Water Resources is measured differently than its book value, which is the value of Global that is recorded on the company's balance sheet. Investors also form their own opinion of Global Water's value that differs from its market value or its book value, called intrinsic value, which is Global Water'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 Global Water's market value can be influenced by many factors that don't directly affect Global Water'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 Global Water's value and its price as these two are different measures arrived at by different means. Investors typically determine if Global Water is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Global Water'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.
- 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.