Eco Atlantic Oil Corporate Bonds and Leverage Analysis
EOG Stock | CAD 0.18 0.00 0.00% |
Interest Debt Per Share is likely to climb to 0.04 in 2025, whereas Net Debt is likely to drop (2.8 M) in 2025. . Eco Atlantic's financial risk is the risk to Eco Atlantic stockholders that is caused by an increase in debt.
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.0185 | Current Value 0.0165 | Quarterly Volatility 0.00112315 |
Eco |
Given the importance of Eco Atlantic's capital structure, the first step in the capital decision process is for the management of Eco Atlantic to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Eco Atlantic Oil to issue bonds at a reasonable cost.
Eco Atlantic Oil Debt to Cash Allocation
Many companies such as Eco Atlantic, 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.
Eco Atlantic Oil has accumulated 1.25 M in total debt. Eco Atlantic Oil has a current ratio of 15.92, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Eco Atlantic until it has trouble settling it off, either with new capital or with free cash flow. So, Eco Atlantic'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 Eco Atlantic Oil sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Eco to invest in growth at high rates of return. When we think about Eco Atlantic's use of debt, we should always consider it together with cash and equity.Eco Atlantic Total Assets Over Time
Eco Atlantic Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Eco Atlantic 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.Eco Atlantic Debt Ratio | 1.65 |
Eco Atlantic Corporate Bonds Issued
Eco Net Debt
Understaning Eco Atlantic Use of Financial Leverage
Understanding the structure of Eco Atlantic's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Eco Atlantic's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Last Reported | Projected for Next Year | ||
Net Debt | -2.7 M | -2.8 M | |
Short Term Debt | -99.8 K | -94.8 K | |
Short and Long Term Debt Total | 314 K | 279.1 K | |
Net Debt To EBITDA | 4.58 | 4.35 | |
Debt To Equity | 0.02 | 0.02 | |
Interest Debt Per Share | 0.04 | 0.04 | |
Debt To Assets | 0.02 | 0.02 | |
Total Debt To Capitalization | 0.02 | 0.02 | |
Debt Equity Ratio | 0.02 | 0.02 | |
Debt Ratio | 0.02 | 0.02 | |
Cash Flow To Debt Ratio | (9.04) | (9.49) |
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When running Eco Atlantic's price analysis, check to measure Eco Atlantic's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Eco Atlantic is operating at the current time. Most of Eco Atlantic's value examination focuses on studying past and present price action to predict the probability of Eco Atlantic's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Eco Atlantic's price. Additionally, you may evaluate how the addition of Eco Atlantic to your portfolios can decrease your overall portfolio volatility.
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.