Anywhere Real Estate Corporate Bonds and Leverage Analysis

HOUS Stock  USD 4.25  0.20  4.49%   
Anywhere Real Estate holds a debt-to-equity ratio of 1.622. . Anywhere Real's financial risk is the risk to Anywhere Real stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Anywhere Real'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. Anywhere Real'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 Anywhere Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Anywhere Real's stakeholders.
For most companies, including Anywhere Real, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Anywhere Real Estate, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Anywhere Real's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
  
Check out the analysis of Anywhere Real Fundamentals Over Time.
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Given the importance of Anywhere Real's capital structure, the first step in the capital decision process is for the management of Anywhere Real 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 Anywhere Real Estate to issue bonds at a reasonable cost.

Anywhere Real Bond Ratings

Anywhere Real Estate financial ratings play a critical role in determining how much Anywhere Real 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 Anywhere Real's borrowing costs.
Piotroski F Score
5
HealthyView
Beneish M Score
(2.10)
Possible ManipulatorView

Anywhere Real Estate Debt to Cash Allocation

Many companies such as Anywhere Real, 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.
Anywhere Real Estate currently holds 3.11 B in liabilities with Debt to Equity (D/E) ratio of 1.62, which is about average as compared to similar companies. Anywhere Real Estate has a current ratio of 0.65, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Anywhere Real's use of debt, we should always consider it together with its cash and equity.

Anywhere Real 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 Anywhere Real's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Anywhere Real, which in turn will lower the firm's financial flexibility.

Anywhere Real Corporate Bonds Issued

Understaning Anywhere Real Use of Financial Leverage

Anywhere Real's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Anywhere Real's current equity. If creditors own a majority of Anywhere Real's assets, the company is considered highly leveraged. Understanding the composition and structure of Anywhere Real's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Anywhere Real Estate Inc., through its subsidiaries, provides residential real estate services in the United States and internationally. Anywhere Real Estate Inc. was incorporated in 2006 and is headquartered in Madison, New Jersey. Anywhere Real operates under Real Estate Services classification in the United States and is traded on New York Stock Exchange. It employs 9665 people.
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Additional Tools for Anywhere Stock Analysis

When running Anywhere Real's price analysis, check to measure Anywhere Real'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 Anywhere Real is operating at the current time. Most of Anywhere Real's value examination focuses on studying past and present price action to predict the probability of Anywhere Real's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Anywhere Real's price. Additionally, you may evaluate how the addition of Anywhere Real to your portfolios can decrease your overall portfolio volatility.

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.
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.