CLEARWAY ENERGY Current Debt
| NY4B Stock | EUR 22.20 0.80 3.48% |
CLEARWAY ENERGY A has over 6.03 Billion in debt which may indicate that it relies heavily on debt financing. CLEARWAY ENERGY's financial risk is the risk to CLEARWAY ENERGY stockholders that is caused by an increase in debt.
Given that CLEARWAY ENERGY'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 CLEARWAY ENERGY 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 CLEARWAY ENERGY to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, CLEARWAY ENERGY is said to be less leveraged. If creditors hold a majority of CLEARWAY ENERGY's assets, the Company is said to be highly leveraged.
CLEARWAY |
CLEARWAY ENERGY Financial Leverage Rating
CLEARWAY ENERGY A bond ratings play a critical role in determining how much CLEARWAY ENERGY 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 CLEARWAY ENERGY's borrowing costs.CLEARWAY ENERGY A Debt to Cash Allocation
As CLEARWAY ENERGY A follows its natural business cycle, the capital allocation decisions will not magically go away. CLEARWAY ENERGY'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 6.03 B in total debt with debt to equity ratio (D/E) of 281.2, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. CLEARWAY ENERGY A has a current ratio of 0.25, indicating that it has a negative working capital and may not be able to pay financial obligations in time and when they become due. Debt can assist CLEARWAY ENERGY until it has trouble settling it off, either with new capital or with free cash flow. So, CLEARWAY ENERGY'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 CLEARWAY ENERGY A sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for CLEARWAY to invest in growth at high rates of return. When we think about CLEARWAY ENERGY's use of debt, we should always consider it together with cash and equity.CLEARWAY ENERGY 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 CLEARWAY ENERGY's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of CLEARWAY ENERGY, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a CLEARWAY ENERGY debt ratio should be compared their industry average or other competing firms.Understaning CLEARWAY ENERGY Use of Financial Leverage
CLEARWAY ENERGY financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures CLEARWAY ENERGY'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 CLEARWAY ENERGY assets, the company is considered highly leveraged. Understanding the composition and structure of overall CLEARWAY ENERGY 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 CLEARWAY ENERGY'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 CLEARWAY ENERGY'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).
Clearway Energy, Inc., through its subsidiaries, acquires, owns, and operates contracted renewable energy and conventional generation, and thermal infrastructure assets in the United States. Clearway Energy, Inc. operates as a subsidiary of Clearway Energy Group LLC. CLEARWAY ENERGY operates under Utilities - Regulated Electric classification in Germany and is traded on Frankfurt Stock Exchange. It employs 269 people. Please read more on our technical analysis page.
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Check out the analysis of CLEARWAY ENERGY Fundamentals Over Time. Note that the CLEARWAY ENERGY A information on this page should be used as a complementary analysis to other CLEARWAY ENERGY'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Complementary Tools for CLEARWAY Stock analysis
When running CLEARWAY ENERGY's price analysis, check to measure CLEARWAY ENERGY'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 CLEARWAY ENERGY is operating at the current time. Most of CLEARWAY ENERGY's value examination focuses on studying past and present price action to predict the probability of CLEARWAY ENERGY's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move CLEARWAY ENERGY's price. Additionally, you may evaluate how the addition of CLEARWAY ENERGY to your portfolios can decrease your overall portfolio volatility.
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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.