Elme Communities Debt
| ELME Stock | USD 16.40 0.24 1.49% |
Elme Communities holds a debt-to-equity ratio of 0.421. . Elme Communities' financial risk is the risk to Elme Communities stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Elme Communities' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Elme Communities' 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 Elme Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Elme Communities' stakeholders.
Elme Communities Quarterly Net Debt |
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For most companies, including Elme Communities, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Elme Communities, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Elme Communities' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 1.2945 | Book Value 12.484 | Operating Margin 0.1103 | Profit Margin (0.06) | Return On Assets 0.0078 |
Given that Elme Communities' 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 Elme Communities 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 Elme Communities to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Elme Communities is said to be less leveraged. If creditors hold a majority of Elme Communities' assets, the Company is said to be highly leveraged.
Elme |
Elme Communities Debt to Cash Allocation
Many companies such as Elme Communities, 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.
Elme Communities currently holds 679.35 M in liabilities with Debt to Equity (D/E) ratio of 0.42, which is about average as compared to similar companies. Elme Communities has a current ratio of 1.04, suggesting that it is not liquid enough and may have problems paying out its financial obligations when due. Note, when we think about Elme Communities' use of debt, we should always consider it together with its cash and equity.Elme Communities 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 Elme Communities' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Elme Communities, which in turn will lower the firm's financial flexibility.Elme Communities Corporate Bonds Issued
Most Elme bonds can be classified according to their maturity, which is the date when Elme Communities 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 Elme Communities Use of Financial Leverage
Elme Communities' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Elme Communities' total debt position, including all outstanding debt obligations, and compares it with Elme Communities' equity. Financial leverage can amplify the potential profits to Elme Communities' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Elme Communities is unable to cover its debt costs.
Elme Communities owns and operates uniquely positioned real estate assets in the Washington Metro area. With a track record of driving returns and delivering satisfaction, we are a trusted authority in one of the nations most competitive real estate markets. Elme Communities operates under REITOffice classification in the United States and is traded on New York Stock Exchange. It employs 53 people. Please read more on our technical analysis page.
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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.When determining whether Elme Communities is a strong investment it is important to analyze Elme Communities' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Elme Communities' future performance. For an informed investment choice regarding Elme Stock, refer to the following important reports:Check out the analysis of Elme Communities Fundamentals Over Time. For information on how to trade Elme Stock refer to our How to Trade Elme Stock guide.You can also try the Stocks Directory module to find actively traded stocks across global markets.
Is Multi-Family Residential REITs 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 Elme Communities. If investors know Elme 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 Elme Communities listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Dividend Share 0.72 | Earnings Share (0.16) | Revenue Per Share 2.726 | Quarterly Revenue Growth 0.078 | Return On Assets 0.0078 |
The market value of Elme Communities is measured differently than its book value, which is the value of Elme that is recorded on the company's balance sheet. Investors also form their own opinion of Elme Communities' value that differs from its market value or its book value, called intrinsic value, which is Elme Communities' 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 Elme Communities' market value can be influenced by many factors that don't directly affect Elme Communities' 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 Elme Communities' value and its price as these two are different measures arrived at by different means. Investors typically determine if Elme Communities is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Elme Communities' 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.