Easywell Biomedicals Current Debt
| 1799 Stock | TWD 67.90 3.10 4.78% |
Easywell Biomedicals holds a debt-to-equity ratio of 0.411. . Easywell Biomedicals' financial risk is the risk to Easywell Biomedicals stockholders that is caused by an increase in debt.
Given that Easywell Biomedicals' 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 Easywell Biomedicals 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 Easywell Biomedicals to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Easywell Biomedicals is said to be less leveraged. If creditors hold a majority of Easywell Biomedicals' assets, the Company is said to be highly leveraged.
Easywell |
Easywell Biomedicals Debt to Cash Allocation
Many companies such as Easywell Biomedicals, 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.
Easywell Biomedicals has accumulated 344.06 M in total debt with debt to equity ratio (D/E) of 0.41, which is about average as compared to similar companies. Easywell Biomedicals has a current ratio of 6.51, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Easywell Biomedicals until it has trouble settling it off, either with new capital or with free cash flow. So, Easywell Biomedicals' 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 Easywell Biomedicals sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Easywell to invest in growth at high rates of return. When we think about Easywell Biomedicals' use of debt, we should always consider it together with cash and equity.Easywell Biomedicals 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 Easywell Biomedicals' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Easywell Biomedicals, which in turn will lower the firm's financial flexibility.Understaning Easywell Biomedicals Use of Financial Leverage
Understanding the structure of Easywell Biomedicals' debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Easywell Biomedicals' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Easywell Biomedicals, Inc., a biopharmaceutical and medical device company, develops and commercializes medical devices, drug substances, and pharmaceutical dosage forms in Taiwan and internationally. Easywell Biomedicals, Inc. was incorporated in 1998 and is headquartered in Hsinchu City, Taiwan. EASYWELL BIOMEDICAL operates under Medical Devices classification in Taiwan and is traded on Taiwan OTC Exchange. Please read more on our technical analysis page.
Pair Trading with Easywell Biomedicals
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Easywell Biomedicals position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Easywell Biomedicals will appreciate offsetting losses from the drop in the long position's value.Moving against Easywell Stock
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The ability to find closely correlated positions to Easywell Biomedicals could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Easywell Biomedicals when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Easywell Biomedicals - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Easywell Biomedicals to buy it.
The correlation of Easywell Biomedicals is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Easywell Biomedicals moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Easywell Biomedicals moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Easywell Biomedicals can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Additional Tools for Easywell Stock Analysis
When running Easywell Biomedicals' price analysis, check to measure Easywell Biomedicals' 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 Easywell Biomedicals is operating at the current time. Most of Easywell Biomedicals' value examination focuses on studying past and present price action to predict the probability of Easywell Biomedicals' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Easywell Biomedicals' price. Additionally, you may evaluate how the addition of Easywell Biomedicals to your portfolios can decrease your overall portfolio volatility.
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.