Matthews International Debt
| ASIA Etf | USD 38.01 0.14 0.37% |
Matthews International holds a debt-to-equity ratio of 0.01. With a high degree of financial leverage come high-interest payments, which usually reduce Matthews International's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Matthews International'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. Matthews International'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 Matthews Etf's retail investors understand whether an upcoming fall or rise in the market will negatively affect Matthews International's stakeholders.
For most companies, including Matthews International, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Matthews International Funds, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Matthews International's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Total Assets 47.1 M |
Given that Matthews International'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 Matthews International 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 Matthews International to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Matthews International is said to be less leveraged. If creditors hold a majority of Matthews International's assets, the ETF is said to be highly leveraged.
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Matthews International Debt to Cash Allocation
Matthews International Funds currently holds 5.72 M in liabilities with Debt to Equity (D/E) ratio of 0.01, which may suggest the company is not taking enough advantage from borrowing. Matthews International has a current ratio of 3.01, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Matthews International until it has trouble settling it off, either with new capital or with free cash flow. So, Matthews International'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 Matthews International sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Matthews to invest in growth at high rates of return. When we think about Matthews International's use of debt, we should always consider it together with cash and equity.Matthews International 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 Matthews International's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Matthews International, which in turn will lower the firm's financial flexibility.Matthews International Corporate Bonds Issued
Most Matthews bonds can be classified according to their maturity, which is the date when Matthews International Funds has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Understaning Matthews International Use of Financial Leverage
Matthews International's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Matthews International's total debt position, including all outstanding debt obligations, and compares it with Matthews International's equity. Financial leverage can amplify the potential profits to Matthews International's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Matthews International is unable to cover its debt costs.
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Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.When determining whether Matthews International is a strong investment it is important to analyze Matthews International's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Matthews International's future performance. For an informed investment choice regarding Matthews Etf, refer to the following important reports:Check out the analysis of Matthews International Financial Statements. For information on how to trade Matthews Etf refer to our How to Trade Matthews Etf guide.You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Matthews International's market price often diverges from its book value, the accounting figure shown on Matthews's balance sheet. Smart investors calculate Matthews International's intrinsic value - its true economic worth - which may differ significantly from both market price and book value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Since Matthews International's trading price responds to investor sentiment, macroeconomic conditions, and market psychology, it can swing far from fundamental value.
Understanding that Matthews International's value differs from its trading price is crucial, as each reflects different aspects of the company. Evaluating whether Matthews International represents a sound investment requires analyzing earnings trends, revenue growth, technical signals, industry dynamics, and expert forecasts. However, Matthews International'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.