Blue Earth Current Debt
| BERI Stock | USD 0.01 0.00 0.00% |
Blue Earth Resources holds a debt-to-equity ratio of 0.006. With a high degree of financial leverage come high-interest payments, which usually reduce Blue Earth's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Blue Earth'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. Blue Earth'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 Blue Pink Sheet's retail investors understand whether an upcoming fall or rise in the market will negatively affect Blue Earth's stakeholders.
For most companies, including Blue Earth, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Blue Earth Resources, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Blue Earth's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Blue Earth'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 Blue Earth 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 Blue Earth to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Blue Earth is said to be less leveraged. If creditors hold a majority of Blue Earth's assets, the Company is said to be highly leveraged.
Blue |
Blue Earth Resources Debt to Cash Allocation
Blue Earth Resources currently holds 23.6 K in liabilities with Debt to Equity (D/E) ratio of 0.01, which may suggest the company is not taking enough advantage from borrowing. Blue Earth Resources has a current ratio of 0.52, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist Blue Earth until it has trouble settling it off, either with new capital or with free cash flow. So, Blue Earth'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 Blue Earth Resources sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Blue to invest in growth at high rates of return. When we think about Blue Earth's use of debt, we should always consider it together with cash and equity.Blue Earth 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 Blue Earth's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Blue Earth, which in turn will lower the firm's financial flexibility.Understaning Blue Earth Use of Financial Leverage
Understanding the composition and structure of Blue Earth's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Blue Earth'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).
Blue Earth Resources, Inc., through its subsidiary, PetroResources, Inc., engages in the acquisition and asset management of royalty and override royalty interests, andor non-operating working interests in producing oil and gas properties in the United States. Blue Earth Resources, Inc. is based in Inver Grove Heights, Minnesota. Blue Earth operates under Oil Gas Refining Marketing classification in the United States and is traded on OTC Exchange. Please read more on our technical analysis page.
Currently Active Assets on Macroaxis
Other Information on Investing in Blue Pink Sheet
Blue Earth financial ratios help investors to determine whether Blue Pink Sheet is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Blue with respect to the benefits of owning Blue Earth security.
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.