Eureka Acquisition Current Debt

EURK Stock   10.12  0.02  0.20%   
The value of Net Debt To EBITDA is estimated to slide to -18.46. The value of Debt To Equity is estimated to slide to 4.23. Eureka Acquisition's financial risk is the risk to Eureka Acquisition stockholders that is caused by an increase in debt.
Given that Eureka Acquisition'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 Eureka Acquisition 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 Eureka Acquisition to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Eureka Acquisition is said to be less leveraged. If creditors hold a majority of Eureka Acquisition's assets, the Company is said to be highly leveraged.
  
Check out the analysis of Eureka Acquisition Fundamentals Over Time.

Eureka Acquisition Financial Rating

Eureka Acquisition Corp financial ratings play a critical role in determining how much Eureka Acquisition have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Eureka Acquisition's borrowing costs.
Piotroski F Score
1
Very WeakView

Eureka Acquisition Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Eureka Acquisition 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.

Eureka Acquisition Debt Ratio

    
  30.0   
It seems about 70% of Eureka Acquisition's assets are financed through equity. 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 Eureka Acquisition's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Eureka Acquisition, which in turn will lower the firm's financial flexibility.

Understaning Eureka Acquisition Use of Financial Leverage

Leverage ratios show Eureka Acquisition'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 Eureka Acquisition'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).
Last ReportedProjected for Next Year
Net Debt To EBITDA(17.58)(18.46)
Debt To Equity 4.76  4.23 
Interest Debt Per Share 0.07  0.07 
Debt To Assets 0.33  0.30 
Total Debt To Capitalization 0.76  0.67 
Debt Equity Ratio 4.76  4.23 
Debt Ratio 0.33  0.30 
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When determining whether Eureka Acquisition Corp is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if Eureka Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Eureka Acquisition Corp Stock. Highlighted below are key reports to facilitate an investment decision about Eureka Acquisition Corp Stock:
Check out the analysis of Eureka Acquisition Fundamentals Over Time.
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Is Trading 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 Eureka Acquisition. If investors know Eureka 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 Eureka Acquisition listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Eureka Acquisition Corp is measured differently than its book value, which is the value of Eureka that is recorded on the company's balance sheet. Investors also form their own opinion of Eureka Acquisition's value that differs from its market value or its book value, called intrinsic value, which is Eureka Acquisition's 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 Eureka Acquisition's market value can be influenced by many factors that don't directly affect Eureka Acquisition's 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 Eureka Acquisition's value and its price as these two are different measures arrived at by different means. Investors typically determine if Eureka Acquisition is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Eureka Acquisition's 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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.