RICO AUTO Current Financial Leverage

RICOAUTO -  India Stock  

INR 45.35  0.40  0.87%

RICO AUTO's 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. RICO AUTO's financial risk is the risk to RICO AUTO 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).
Additionally, take a look at the analysis of RICO AUTO Fundamentals Over Time.

RICOAUTO Bonds 

 
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RICOAUTO Current Financial Burden

RICO AUTO'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. RICO AUTO'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 RICOAUTO Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect RICO AUTO's stakeholders.

Asset vs Debt

Equity vs Debt

For most companies, including RICO AUTO, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running RICO AUTO INDS 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.
Given the importance of RICO AUTO's capital structure, the first step in the capital decision process is for the management of RICO AUTO 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 RICO AUTO INDS to issue bonds at a reasonable cost.

RICO AUTO Financial Leverage Rating

RICO AUTO INDS bond ratings play a critical role in determining how much RICO AUTO 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 RICO AUTO's borrowing costs.
Overall Bond Rating
Not Rated
Average S&P Rating
N/A

RICO AUTO INDS Debt to Cash Allocation

As RICO AUTO INDS follows its natural business cycle, the capital allocation decisions will not magically go away. RICO AUTO'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 4.59 B in total debt with debt to equity ratio (D/E) of 0.75, which is about average as compared to similar companies. RICO AUTO INDS has a current ratio of 0.96, indicating that it has a negative working capital and may not be able to pay financial obligations in time and when they become due.

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

Understaning RICO AUTO Use of Financial Leverage

RICO AUTO financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures RICO AUTO'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 RICO AUTO assets, the company is considered highly leveraged. Understanding the composition and structure of overall RICO AUTO 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.
Please read more on our technical analysis page.
Rico Auto Industries Limited, an engineering company, manufactures and supplies high precision fully machined aluminum, and ferrous components and assemblies to automotive original equipment manufacturers worldwide. Rico Auto Industries Limited was incorporated in 1983 and is based in Gurugram, India. RICO AUTO operates under Auto Parts classification in India and is traded on National Stock Exchange of India.

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Additionally, take a look at the analysis of RICO AUTO Fundamentals Over Time. Note that the RICO AUTO INDS information on this page should be used as a complementary analysis to other RICO AUTO'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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Tools for RICOAUTO Stock

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