Chicos FAS Debt
| CHSDelisted Stock | USD 5.85 0.18 3.17% |
Chicos FAS holds a debt-to-equity ratio of 2.065. . Chicos FAS's financial risk is the risk to Chicos FAS stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Chicos FAS'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. Chicos FAS'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 Chicos Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Chicos FAS's stakeholders.
For most companies, including Chicos FAS, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Chicos FAS, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Chicos FAS'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 Chicos FAS'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 Chicos FAS 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 Chicos FAS to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Chicos FAS is said to be less leveraged. If creditors hold a majority of Chicos FAS's assets, the Company is said to be highly leveraged.
Chicos |
Chicos FAS Debt to Cash Allocation
Many companies such as Chicos FAS, 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.
Chicos FAS has 551.61 M in debt with debt to equity (D/E) ratio of 2.07, meaning that the company heavily relies on borrowing funds for operations. Chicos FAS has a current ratio of 1.16, demonstrating that it is in a questionable position to pay out its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Chicos to invest in growth at high rates of return. Chicos FAS 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 Chicos FAS's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Chicos FAS, which in turn will lower the firm's financial flexibility.Chicos FAS Corporate Bonds Issued
Understaning Chicos FAS Use of Financial Leverage
Chicos FAS's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Chicos FAS's current equity. If creditors own a majority of Chicos FAS's assets, the company is considered highly leveraged. Understanding the composition and structure of Chicos FAS's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Chicos FAS, Inc. operates as an omnichannel specialty retailer of womens private branded casual-to-dressy clothing, intimates, and complementary accessories. Chicos FAS, Inc. was incorporated in 1983 and is headquartered in Fort Myers, Florida. Chicos Fas operates under Apparel Retail classification in the United States and is traded on New York Stock Exchange. It employs 12700 people. Please read more on our technical analysis page.
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Other Consideration for investing in Chicos Stock
If you are still planning to invest in Chicos FAS check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Chicos FAS's history and understand the potential risks before investing.
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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.