Marcus' 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. Marcus' financial risk is the risk to Marcus 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
Marcus' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Marcus' 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 Marcus Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Marcus' stakeholders.
Marcus Quarterly Debt to Equity Ratio
For most companies, including Marcus, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Marcus 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.
Return On Assets
Given that Marcus' 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 Marcus 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 Marcus to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Marcus is said to be less leveraged. If creditors hold a majority of Marcus' assets, the company is said to be highly leveraged.At this time, Marcus' Debt Current is comparatively stable as compared to the past year. Issuance Repayment of Debt Securities is likely to gain to about 98.5 M in 2023, whereas Total Debt is likely to drop slightly above 511.2 M in 2023. Check out the analysis of Marcus Fundamentals Over Time.
Marcus Financial Leverage RatingMarcus bond ratings play a critical role in determining how much Marcus 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 Marcus' borrowing costs.
Marcus Debt to Cash Allocation
As Marcus follows its natural business cycle, the capital allocation decisions will not magically go away. Marcus' 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 407.77 M in debt with debt to equity (D/E) ratio of 1.11, which is OK given its current industry classification. Marcus 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 Marcus until it has trouble settling it off, either with new capital or with free cash flow. So, Marcus' 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 Marcus sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Marcus to invest in growth at high rates of return. When we think about Marcus' use of debt, we should always consider it together with cash and equity.
Marcus Inventories Over Time
Marcus Assets Financed by DebtThe debt-to-assets ratio shows the degree to which Marcus 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.
Marcus Debt Ratio
Marcus Historical Liabilities
While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Marcus, understanding its historical liability is critical in projecting Marcus' 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 Marcus uses its financing power over time.
In order to fund their growth, businesses such as Marcus 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 Marcus' 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 Marcus Use of Financial Leverage
Marcus financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Marcus'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 Marcus assets, the company is considered highly leveraged. Understanding the composition and structure of overall Marcus 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 Marcus' 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 Marcus' 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).
Marcus Investors Sentiment
The influence of Marcus' 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 Marcus. 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 market does not have solid backing from leading economists and market statisticians.
Investor biases related to Marcus' public news can be used to forecast risks associated with an investment in Marcus. The trend in average sentiment can be used to explain how an investor holding Marcus can time the market purely based on public headlines and social activities around Marcus. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
Marcus' market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Marcus' and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Marcus' news discussions. The higher the estimated score, the more favorable is the investor's outlook on Marcus.
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 Marcus 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, Marcus' short interest history, or implied volatility extrapolated from Marcus options trading.
Becoming a Better Investor with MacroaxisMacroaxis puts the power of mathematics on your side. We analyze your portfolios and positions such as Marcus using complex mathematical models and algorithms, but make them easy to understand. There is no real person involved in your portfolio analysis. We perform a number of calculations to compute absolute and relative portfolio volatility, correlation between your assets, value at risk, expected return as well as over 100 different fundamental and technical indicators.
When determining whether Marcus is a strong investment it is important to analyze Marcus' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Marcus' future performance. For an informed investment choice regarding Marcus Stock, refer to the following important reports:
Build Optimal Portfolios
Align your risk with return expectations
Check out the analysis of Marcus Fundamentals Over Time.For more information on how to buy Marcus Stock please use our How to Invest in Marcus guide.Note that the Marcus information on this page should be used as a complementary analysis to other Marcus' 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Complementary Tools for Marcus Stock analysis
When running Marcus' price analysis, check to measure Marcus' 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 Marcus is operating at the current time. Most of Marcus' value examination focuses on studying past and present price action to predict the probability of Marcus' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Marcus' price. Additionally, you may evaluate how the addition of Marcus to your portfolios can decrease your overall portfolio volatility.
Is Marcus' 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 Marcus. If investors know Marcus 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 Marcus 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
Revenue Per Share
Quarterly Revenue Growth
The market value of Marcus is measured differently than its book value, which is the value of Marcus that is recorded on the company's balance sheet. Investors also form their own opinion of Marcus' value that differs from its market value or its book value, called intrinsic value, which is Marcus' 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 Marcus' market value can be influenced by many factors that don't directly affect Marcus' 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 Marcus' value and its price as these two are different measures arrived at by different means. Investors typically determine if Marcus is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Marcus' 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 CostsThe 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 LeverageLeverage 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.