Enel Chile Debt
| ENELCHILE | CLP 53.57 0.97 1.78% |
Enel Chile SA has over 1.87 Trillion in debt which may indicate that it relies heavily on debt financing. With a high degree of financial leverage come high-interest payments, which usually reduce Enel Chile's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Enel Chile'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. Enel Chile'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 Enel Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Enel Chile's stakeholders.
For most companies, including Enel Chile, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Enel Chile SA, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Enel Chile'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 Enel Chile'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 Enel Chile 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 Enel Chile to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Enel Chile is said to be less leveraged. If creditors hold a majority of Enel Chile's assets, the Company is said to be highly leveraged.
Enel |
Enel Chile SA Debt to Cash Allocation
Enel Chile SA has accumulated 1.87 T in total debt with debt to equity ratio (D/E) of 69.3, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Enel Chile SA has a current ratio of 1.2, suggesting that it is not liquid enough and may have problems paying out its financial obligations in time and when they become due. Debt can assist Enel Chile until it has trouble settling it off, either with new capital or with free cash flow. So, Enel Chile's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Enel Chile SA sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Enel to invest in growth at high rates of return. When we think about Enel Chile's use of debt, we should always consider it together with cash and equity.Enel Chile 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 Enel Chile's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Enel Chile, which in turn will lower the firm's financial flexibility.Enel Chile Corporate Bonds Issued
Most Enel bonds can be classified according to their maturity, which is the date when Enel Chile SA 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 Enel Chile Use of Financial Leverage
Understanding the composition and structure of Enel Chile's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Enel Chile's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Enel Chile S.A., an electricity utility company, engages in the generation, transmission, and distribution of electricity in Chile. The company was founded in 2016 and is headquartered in Santiago, Chile. ENEL CHILE operates under Utilities - Regulated Electric classification in Exotistan and is traded on Commodity Exchange. It employs 2095 people. Please read more on our technical analysis page.
Pair Trading with Enel Chile
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Enel Chile position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enel Chile will appreciate offsetting losses from the drop in the long position's value.Moving together with Enel Stock
| 0.69 | AFPCAPITAL | AFP Capital SA | PairCorr |
Moving against Enel Stock
The ability to find closely correlated positions to Enel Chile could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Enel Chile when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Enel Chile - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Enel Chile SA to buy it.
The correlation of Enel Chile is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Enel Chile moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Enel Chile SA moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Enel Chile can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Additional Information and Resources on Investing in Enel Stock
When determining whether Enel Chile SA offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Enel Chile's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Enel Chile Sa Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Enel Chile Sa Stock:Check out the analysis of Enel Chile Fundamentals Over Time. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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.