Pioneer Floating Current Financial Leverage
| PHD Etf | USD 9.58 0.03 0.31% |
Pioneer Floating Rate holds a debt-to-equity ratio of 0.491. Pioneer Floating's financial risk is the risk to Pioneer Floating 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
Pioneer Floating'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. Pioneer Floating's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the ETF is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Pioneer Etf's retail investors understand whether an upcoming fall or rise in the market will negatively affect Pioneer Floating's stakeholders.
For most companies, including Pioneer Floating, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Pioneer Floating Rate 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 0.9564 | Book Value 10.09 | Operating Margin 0.9142 | Profit Margin 0.8173 | Return On Assets 0.0585 |
Given that Pioneer Floating's debt-to-equity ratio measures a ETF's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Pioneer Floating 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 Pioneer Floating to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Pioneer Floating is said to be less leveraged. If creditors hold a majority of Pioneer Floating's assets, the ETF is said to be highly leveraged.
Pioneer |
Pioneer Floating Financial Leverage Rating
Pioneer Floating Rate bond ratings play a critical role in determining how much Pioneer Floating 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 Pioneer Floating's borrowing costs.Pioneer Floating Rate Debt to Cash Allocation
As Pioneer Floating Rate follows its natural business cycle, the capital allocation decisions will not magically go away. Pioneer Floating'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 61.2 M in debt with debt to equity (D/E) ratio of 0.49, which is OK given its current industry classification. Pioneer Floating Rate has a current ratio of 0.05, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist Pioneer Floating until it has trouble settling it off, either with new capital or with free cash flow. So, Pioneer Floating'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 Pioneer Floating Rate sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Pioneer to invest in growth at high rates of return. When we think about Pioneer Floating's use of debt, we should always consider it together with cash and equity.Pioneer Floating 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 Pioneer Floating's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Pioneer Floating, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Pioneer Floating debt ratio should be compared their industry average or other competing firms.Understaning Pioneer Floating Use of Financial Leverage
Pioneer Floating financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Pioneer Floating'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 Pioneer Floating assets, the company is considered highly leveraged. Understanding the composition and structure of overall Pioneer Floating 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 Pioneer Floating'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 Pioneer Floating'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).
Pioneer Floating Rate Fund, Inc. is closed ended fixed income mutual fund launched and managed by Pioneer Investment Management, Inc. Pioneer Floating is traded on New York Stock Exchange in the United States. Please read more on our technical analysis page.
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 Pioneer Floating 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, Pioneer Floating's short interest history, or implied volatility extrapolated from Pioneer Floating options trading.
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Check out the analysis of Pioneer Floating Fundamentals Over Time. Note that the Pioneer Floating Rate information on this page should be used as a complementary analysis to other Pioneer Floating'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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
The market value of Pioneer Floating Rate is measured differently than its book value, which is the value of Pioneer that is recorded on the company's balance sheet. Investors also form their own opinion of Pioneer Floating's value that differs from its market value or its book value, called intrinsic value, which is Pioneer Floating'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 Pioneer Floating's market value can be influenced by many factors that don't directly affect Pioneer Floating'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 Pioneer Floating's value and its price as these two are different measures arrived at by different means. Investors typically determine if Pioneer Floating is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Pioneer Floating'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.