Delta Air Debt
| DAL Stock | USD 63.35 0.00 0.00% |
Delta Air Lines has over 27.28 Billion in debt which may indicate that it relies heavily on debt financing. At this time, Delta Air's Interest Debt Per Share is quite stable compared to the past year. Debt Equity Ratio is expected to rise to 3.17 this year, although the value of Long Term Debt Total will most likely fall to about 13.9 B. . Delta Air's financial risk is the risk to Delta Air stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Delta Air'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. Delta Air'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 Delta Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Delta Air's stakeholders.
For most companies, including Delta Air, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Delta Air Lines, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Delta Air'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 3.0094 | Book Value 21.285 | Operating Margin 0.0845 | Profit Margin 0.0771 | Return On Assets 0.0527 |
Delta |
Delta Air Bond Ratings
Delta Air Lines financial ratings play a critical role in determining how much Delta Air have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Delta Air's borrowing costs.| Piotroski F Score | 8 | Strong | View |
| Beneish M Score | (1.69) | Possible Manipulator | View |
Delta Air Lines Debt to Cash Allocation
Many companies such as Delta Air, 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.
Delta Air Lines has 27.28 B in debt with debt to equity (D/E) ratio of 6.96, demonstrating that the company may be unable to create cash to meet all of its financial commitments. Delta Air Lines has a current ratio of 0.56, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Note however, debt could still be an excellent tool for Delta to invest in growth at high rates of return. Delta Air Total Assets Over Time
Delta Air Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Delta Air 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.Delta Air Debt Ratio | 22.0 |
Delta Air Corporate Bonds Issued
Delta Air issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Delta Air Lines uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt.
Delta Short Long Term Debt Total
Short Long Term Debt Total |
|
Understaning Delta Air Use of Financial Leverage
Leverage ratios show Delta Air's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Delta Air's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 27.3 B | 28.6 B | |
| Net Debt | 24.5 B | 25.8 B | |
| Short Term Debt | 4.5 B | 4.7 B | |
| Long Term Debt | 17.1 B | 12.9 B | |
| Long Term Debt Total | 23.8 B | 13.9 B | |
| Short and Long Term Debt | 3 B | 2 B | |
| Net Debt To EBITDA | 2.79 | 2.93 | |
| Debt To Equity | 1.78 | 3.17 | |
| Interest Debt Per Share | 32.18 | 39.77 | |
| Debt To Assets | 0.27 | 0.22 | |
| Long Term Debt To Capitalization | 0.59 | 0.41 | |
| Total Debt To Capitalization | 0.64 | 0.38 | |
| Debt Equity Ratio | 1.78 | 3.17 | |
| Debt Ratio | 0.27 | 0.22 | |
| Cash Flow To Debt Ratio | 0.33 | 0.41 |
Building efficient market-beating portfolios requires time, education, and a lot of computing power!
The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.
Try AI Portfolio ArchitectCheck out the analysis of Delta Air Fundamentals Over Time. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Is Passenger Airlines space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Delta Air. If investors know Delta will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Delta Air listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.145 | Dividend Share 0.5 | Earnings Share 7.21 | Revenue Per Share 94.267 | Quarterly Revenue Growth 0.012 |
The market value of Delta Air Lines is measured differently than its book value, which is the value of Delta that is recorded on the company's balance sheet. Investors also form their own opinion of Delta Air's value that differs from its market value or its book value, called intrinsic value, which is Delta Air's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Delta Air's market value can be influenced by many factors that don't directly affect Delta Air's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Delta Air's value and its price as these two are different measures arrived at by different means. Investors typically determine if Delta Air is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Delta Air'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.