Entra ASA Debt
| ENTRA Stock | NOK 117.20 4.20 3.72% |
Entra ASA has over 22.79 Billion 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 Entra ASA's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Entra ASA'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. Entra ASA'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 Entra Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Entra ASA's stakeholders.
For most companies, including Entra ASA, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Entra ASA, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Entra ASA'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 Entra ASA'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 Entra ASA 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 Entra ASA to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Entra ASA is said to be less leveraged. If creditors hold a majority of Entra ASA's assets, the Company is said to be highly leveraged.
Entra |
Entra ASA Debt to Cash Allocation
Entra ASA has accumulated 22.79 B in total debt with debt to equity ratio (D/E) of 83.5, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Entra ASA has a current ratio of 0.38, indicating that it has a negative working capital and may not be able to pay financial obligations in time and when they become due. Debt can assist Entra ASA until it has trouble settling it off, either with new capital or with free cash flow. So, Entra ASA'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 Entra ASA sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Entra to invest in growth at high rates of return. When we think about Entra ASA's use of debt, we should always consider it together with cash and equity.Entra ASA 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 Entra ASA's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Entra ASA, which in turn will lower the firm's financial flexibility.Entra ASA Corporate Bonds Issued
Understaning Entra ASA Use of Financial Leverage
Leverage ratios show Entra ASA'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 Entra ASA'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).
Entra ASA owns, develops, and manages office properties in Norway. The company was founded in 2000 and is headquartered in Oslo, Norway. ENTRA ASA operates under Office Commercial And Industrial Real Estate classification in Norway and is traded on Oslo Stock Exchange. It employs 170 people. Please read more on our technical analysis page.
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 ArchitectOther Information on Investing in Entra Stock
Entra ASA financial ratios help investors to determine whether Entra 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 Entra with respect to the benefits of owning Entra ASA 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.