Energy Of Debt
| CIG-C Stock | USD 2.45 0.05 2.00% |
Energy of Minas holds a debt-to-equity ratio of 0.487. At present, Energy Of's Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Short Term Debt is expected to grow to about 2.9 B, whereas Cash Flow To Debt Ratio is forecasted to decline to 0.36. With a high degree of financial leverage come high-interest payments, which usually reduce Energy Of's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Energy Of'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. Energy Of'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 Energy Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Energy Of's stakeholders.
Energy Of Quarterly Net Debt |
|
For most companies, including Energy Of, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Energy of Minas, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Energy Of's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 1.545 | Book Value 8.617 | Operating Margin 0.2117 | Profit Margin 0.1574 | Return On Assets 0.0838 |
Given that Energy Of'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 Energy Of 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 Energy Of to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Energy Of is said to be less leveraged. If creditors hold a majority of Energy Of's assets, the Company is said to be highly leveraged.
The current year's Change To Liabilities is expected to grow to about 392.3 M, whereas Total Current Liabilities is forecasted to decline to about 9.2 B. Energy |
Energy of Minas Debt to Cash Allocation
As Energy of Minas follows its natural business cycle, the capital allocation decisions will not magically go away. Energy Of'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.
Energy of Minas has accumulated 10.26 B in total debt with debt to equity ratio (D/E) of 0.49, which is about average as compared to similar companies. Energy of Minas has a current ratio of 1.27, suggesting that it is in a questionable position to pay out its financial obligations in time and when they become due. Note, when we think about Energy Of's use of debt, we should always consider it together with its cash and equity.Energy Of Total Assets Over Time
Energy Of Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Energy Of uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Energy Of Debt Ratio | 22.0 |
Energy Of Corporate Bonds Issued
Most Energy bonds can be classified according to their maturity, which is the date when Energy of Minas 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.
Energy Short Long Term Debt Total
Short Long Term Debt Total |
|
Understaning Energy Of Use of Financial Leverage
Energy Of's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Energy Of's total debt position, including all outstanding debt obligations, and compares it with Energy Of's equity. Financial leverage can amplify the potential profits to Energy Of's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Energy Of is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 10.3 B | 11 B | |
| Net Debt | 8.7 B | 9.5 B | |
| Short Term Debt | 2.7 B | 2.9 B | |
| Long Term Debt | 7.2 B | 11.1 B | |
| Short and Long Term Debt | 2.6 B | 2.6 B | |
| Net Debt To EBITDA | 0.98 | 1.48 | |
| Debt To Equity | 0.43 | 0.62 | |
| Interest Debt Per Share | 3.80 | 4.19 | |
| Debt To Assets | 0.18 | 0.22 | |
| Long Term Debt To Capitalization | 0.24 | 0.28 | |
| Total Debt To Capitalization | 0.30 | 0.34 | |
| Debt Equity Ratio | 0.43 | 0.62 | |
| Debt Ratio | 0.18 | 0.22 | |
| Cash Flow To Debt Ratio | 0.68 | 0.36 |
Also Currently Popular
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.Other Information on Investing in Energy Stock
Energy Of financial ratios help investors to determine whether Energy Stock 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 Energy with respect to the benefits of owning Energy Of 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.