Gawk Inc Corporate Bonds and Leverage Analysis
| GAWK Stock | USD 0.0002 0.00 0.00% |
Long Term Debt is expected to rise to about 223.5 K this year, although the value of Short and Long Term Debt will most likely fall to about 2.7 M. . Gawk's financial risk is the risk to Gawk stockholders that is caused by an increase in debt.
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 2.37 | Current Value 2.06 | Quarterly Volatility 0.13669453 |
Gawk |
Given the importance of Gawk's capital structure, the first step in the capital decision process is for the management of Gawk 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 Gawk Inc to issue bonds at a reasonable cost.
Gawk Bond Ratings
Gawk Inc financial ratings play a critical role in determining how much Gawk 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 Gawk's borrowing costs.| Piotroski F Score | 2 | Frail | View |
| Beneish M Score | (5.50) | Unlikely Manipulator | View |
Gawk Inc Debt to Cash Allocation
Gawk Inc currently holds 2.77 M in liabilities. Gawk Inc has a current ratio of 0.04, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Gawk's use of debt, we should always consider it together with its cash and equity.Gawk Total Assets Over Time
Gawk Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Gawk 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.Gawk Debt Ratio | 206.0 |
Gawk Corporate Bonds Issued
Gawk Short Long Term Debt
Short Long Term Debt |
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Understaning Gawk Use of Financial Leverage
Leverage ratios show Gawk'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 Gawk'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 Reported | Projected for Next Year | ||
| Short and Long Term Debt | 3.2 M | 2.7 M | |
| Short Term Debt | 3.2 M | 2.7 M | |
| Long Term Debt | 143.6 K | 223.5 K | |
| Net Debt To EBITDA | (50.53) | (53.06) | |
| Debt To Equity | (0.38) | (0.40) | |
| Interest Debt Per Share | 1.82 | 1.62 | |
| Debt To Assets | 2.37 | 2.06 | |
| Total Debt To Capitalization | (0.65) | (0.68) | |
| Debt Equity Ratio | (0.38) | (0.40) | |
| Debt Ratio | 2.37 | 2.06 |
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Is Application Software 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 Gawk. If investors know Gawk 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 Gawk listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (0.59) | Revenue Per Share 2.926 | Quarterly Revenue Growth (0.23) | Return On Assets (0.35) |
The market value of Gawk Inc is measured differently than its book value, which is the value of Gawk that is recorded on the company's balance sheet. Investors also form their own opinion of Gawk's value that differs from its market value or its book value, called intrinsic value, which is Gawk'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 Gawk's market value can be influenced by many factors that don't directly affect Gawk'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 Gawk's value and its price as these two are different measures arrived at by different means. Investors typically determine if Gawk is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Gawk'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.