Global Blue Group Corporate Bonds and Leverage Analysis
| GB Stock | USD 6.08 0.37 6.48% |
At present, Global Blue's Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting. The current year's Net Debt is expected to grow to about 606.9 M, whereas Short and Long Term Debt is forecasted to decline to about 844.5 K. With a high degree of financial leverage come high-interest payments, which usually reduce Global Blue's Earnings Per Share (EPS).
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.53992496 | Current Value 0.5 | Quarterly Volatility 0.11334295 |
Global |
Given the importance of Global Blue's capital structure, the first step in the capital decision process is for the management of Global Blue 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 Global Blue Group to issue bonds at a reasonable cost.
Global Blue Bond Ratings
Global Blue Group financial ratings play a critical role in determining how much Global Blue 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 Global Blue's borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (3.06) | Unlikely Manipulator | View |
Global Blue Group Debt to Cash Allocation
As Global Blue Group follows its natural business cycle, the capital allocation decisions will not magically go away. Global Blue's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Global Blue Group reports 612.44 M of total liabilities. Global Blue Group has a current ratio of 1.59, which is generally considered normal. Note however, debt could still be an excellent tool for Global to invest in growth at high rates of return. Global Blue Other Current Liab Over Time
Global Blue Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Global Blue 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.Global Blue Debt Ratio | 50.0 |
Global Blue Corporate Bonds Issued
Most Global bonds can be classified according to their maturity, which is the date when Global Blue Group 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.
Global Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Global Blue Use of Financial Leverage
Global Blue's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Global Blue's total debt position, including all outstanding debt obligations, and compares it with Global Blue's equity. Financial leverage can amplify the potential profits to Global Blue's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Global Blue is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 612.4 M | 758.5 M | |
| Net Debt | 525 M | 606.9 M | |
| Long Term Debt | 588 M | 727.4 M | |
| Short and Long Term Debt | 889 K | 844.5 K | |
| Short Term Debt | 9.7 M | 9.2 M | |
| Long Term Debt Total | 847.7 M | 756.5 M | |
| Net Debt To EBITDA | 3.62 | 3.80 | |
| Debt To Equity | 9.51 | 9.04 | |
| Interest Debt Per Share | 2.76 | 5.35 | |
| Debt To Assets | 0.54 | 0.50 | |
| Long Term Debt To Capitalization | 0.90 | 0.78 | |
| Total Debt To Capitalization | 0.90 | 0.78 | |
| Debt Equity Ratio | 9.51 | 9.04 | |
| Debt Ratio | 0.54 | 0.50 | |
| Cash Flow To Debt Ratio | 0.20 | 0.10 |
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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 Global Blue. If investors know Global 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 Global Blue listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 1.766 | Earnings Share 0.13 | Revenue Per Share 1.894 | Quarterly Revenue Growth 0.246 | Return On Assets 0.0604 |
The market value of Global Blue Group is measured differently than its book value, which is the value of Global that is recorded on the company's balance sheet. Investors also form their own opinion of Global Blue's value that differs from its market value or its book value, called intrinsic value, which is Global Blue'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 Global Blue's market value can be influenced by many factors that don't directly affect Global Blue'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 Global Blue's value and its price as these two are different measures arrived at by different means. Investors typically determine if Global Blue is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Global Blue'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.