Eagle Bulk Debt
| EGLEDelisted Stock | USD 43.50 0.07 0.16% |
Eagle Bulk Shipping holds a debt-to-equity ratio of 0.527. . Eagle Bulk's financial risk is the risk to Eagle Bulk stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Eagle Bulk'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. Eagle Bulk'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 Eagle Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Eagle Bulk's stakeholders.
For most companies, including Eagle Bulk, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Eagle Bulk Shipping, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Eagle Bulk'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 Eagle Bulk'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 Eagle Bulk 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 Eagle Bulk to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Eagle Bulk is said to be less leveraged. If creditors hold a majority of Eagle Bulk's assets, the Company is said to be highly leveraged.
Eagle |
Eagle Bulk Shipping Debt to Cash Allocation
Many companies such as Eagle Bulk, 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.
Eagle Bulk Shipping currently holds 492.53 M in liabilities with Debt to Equity (D/E) ratio of 0.53, which is about average as compared to similar companies. Eagle Bulk Shipping has a current ratio of 1.75, which is within standard range for the sector. Note, when we think about Eagle Bulk's use of debt, we should always consider it together with its cash and equity.Eagle Bulk 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 Eagle Bulk's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Eagle Bulk, which in turn will lower the firm's financial flexibility.Eagle Bulk Corporate Bonds Issued
Most Eagle bonds can be classified according to their maturity, which is the date when Eagle Bulk Shipping 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 Eagle Bulk Use of Financial Leverage
Eagle Bulk's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Eagle Bulk's total debt position, including all outstanding debt obligations, and compares it with Eagle Bulk's equity. Financial leverage can amplify the potential profits to Eagle Bulk's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Eagle Bulk is unable to cover its debt costs.
Eagle Bulk Shipping Inc. engages in the ocean transportation of dry bulk cargoes worldwide. Eagle Bulk Shipping Inc. was incorporated in 2005 and is headquartered in Stamford, Connecticut. Eagle Bulk operates under Marine Shipping classification in the United States and is traded on NASDAQ Exchange. It employs 1000 people. Please read more on our technical analysis page.
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Other Consideration for investing in Eagle Stock
If you are still planning to invest in Eagle Bulk Shipping 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 Eagle Bulk'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.