Magna Mining Current Financial Leverage

NICU Stock   0.74  0.07  10.45%   
Magna Mining holds a debt-to-equity ratio of 0.0. At this time, Magna Mining's Net Debt To EBITDA is fairly stable compared to the past year. Debt To Equity is likely to climb to 0.03 in 2024, whereas Short and Long Term Debt is likely to drop slightly above 32.3 K in 2024. Magna Mining's financial risk is the risk to Magna Mining 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).
At this time, Magna Mining's Net Debt To EBITDA is fairly stable compared to the past year. Debt To Equity is likely to climb to 0.03 in 2024, whereas Short and Long Term Debt is likely to drop slightly above 32.3 K in 2024.
  
Check out the analysis of Magna Mining Fundamentals Over Time.

Magna Mining Financial Leverage Rating

Magna Mining bond ratings play a critical role in determining how much Magna Mining 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 Magna Mining's borrowing costs.

Magna Mining Other Current Liab Over Time

Magna Mining 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 Magna Mining's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Magna Mining, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Magna Mining debt ratio should be compared their industry average or other competing firms.

Magna Long Term Debt

Long Term Debt

30,898.45

At this time, Magna Mining's Long Term Debt is fairly stable compared to the past year.

Understaning Magna Mining Use of Financial Leverage

Magna Mining financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Magna Mining'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 Magna Mining assets, the company is considered highly leveraged. Understanding the composition and structure of overall Magna Mining 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 Magna Mining'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 Magna Mining'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 ReportedProjected for Next Year
Long Term Debt33 K30.9 K
Short and Long Term Debt34.5 K32.3 K
Net Debt To EBITDA 0.25  0.38 
Debt To Equity 0.03  0.03 
Interest Debt Per Share 0  0.0008 
Debt To Assets 0.01  0.01 
Long Term Debt To Capitalization 0  0 
Total Debt To Capitalization 0.03  0.03 
Debt Equity Ratio 0.03  0.03 
Debt Ratio 0.01  0.01 
Cash Flow To Debt Ratio(343.27)(326.10)
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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 Magna Mining 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, Magna Mining's short interest history, or implied volatility extrapolated from Magna Mining options trading.

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Check out the analysis of Magna Mining Fundamentals Over Time.
Note that the Magna Mining information on this page should be used as a complementary analysis to other Magna Mining'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 the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

Complementary Tools for Magna Stock analysis

When running Magna Mining's price analysis, check to measure Magna Mining'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 Magna Mining is operating at the current time. Most of Magna Mining's value examination focuses on studying past and present price action to predict the probability of Magna Mining's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Magna Mining's price. Additionally, you may evaluate how the addition of Magna Mining to your portfolios can decrease your overall portfolio volatility.
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Please note, there is a significant difference between Magna Mining's value and its price as these two are different measures arrived at by different means. Investors typically determine if Magna Mining is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Magna Mining'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.
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.