Forth Public Debt
| FORTH Stock | THB 12.10 0.20 1.63% |
Forth Public has over 198.79 Million 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 Forth Public's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Forth Public'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. Forth Public'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 Forth Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Forth Public's stakeholders.
For most companies, including Forth Public, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Forth Public, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Forth Public'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 Forth Public'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 Forth Public 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 Forth Public to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Forth Public is said to be less leveraged. If creditors hold a majority of Forth Public's assets, the Company is said to be highly leveraged.
Forth |
Forth Public Debt to Cash Allocation
Forth Public has accumulated 198.79 M in total debt with debt to equity ratio (D/E) of 117.5, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Forth Public has a current ratio of 0.88, 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 Forth Public until it has trouble settling it off, either with new capital or with free cash flow. So, Forth Public'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 Forth Public sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Forth to invest in growth at high rates of return. When we think about Forth Public's use of debt, we should always consider it together with cash and equity.Forth Public 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 Forth Public's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Forth Public, which in turn will lower the firm's financial flexibility.Forth Public Corporate Bonds Issued
Most Forth bonds can be classified according to their maturity, which is the date when Forth Public 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 Forth Public Use of Financial Leverage
Forth Public's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Forth Public's total debt position, including all outstanding debt obligations, and compares it with Forth Public's equity. Financial leverage can amplify the potential profits to Forth Public's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Forth Public is unable to cover its debt costs.
Forth Corporation Public Company Limited, together with its subsidiaries, manufactures and distributes telecommunication and electronic equipment, and assembly electronic parts primarily in Thailand. Forth Corporation Public Company Limited was founded in 1989 and is headquartered in Bangkok, Thailand. FORTH CORPORATION operates under Electronic Components classification in Thailand and is traded on Stock Exchange of Thailand. Please read more on our technical analysis page.
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Forth Public financial ratios help investors to determine whether Forth 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 Forth with respect to the benefits of owning Forth Public 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.