Genius Brands Debt
| GNUSDelisted Stock | USD 3.24 0.28 9.46% |
Genius Brands Intern holds a debt-to-equity ratio of 0.667. . Genius Brands' financial risk is the risk to Genius Brands stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Genius Brands' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Genius Brands' 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 Genius Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Genius Brands' stakeholders.
For most companies, including Genius Brands, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Genius Brands International, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Genius Brands' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Genius Brands' 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 Genius Brands 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 Genius Brands to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Genius Brands is said to be less leveraged. If creditors hold a majority of Genius Brands' assets, the Company is said to be highly leveraged.
Genius |
Genius Brands Intern Debt to Cash Allocation
Many companies such as Genius Brands, 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.
Genius Brands International currently holds 92.37 M in liabilities with Debt to Equity (D/E) ratio of 0.67, which is about average as compared to similar companies. Genius Brands Intern has a current ratio of 1.3, suggesting that it is not liquid enough and may have problems paying out its financial obligations when due. Note, when we think about Genius Brands' use of debt, we should always consider it together with its cash and equity.Genius Brands 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 Genius Brands' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Genius Brands, which in turn will lower the firm's financial flexibility.Genius Brands Corporate Bonds Issued
Understaning Genius Brands Use of Financial Leverage
Genius Brands' financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Genius Brands' current equity. If creditors own a majority of Genius Brands' assets, the company is considered highly leveraged. Understanding the composition and structure of Genius Brands' outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Genius Brands International, Inc., a content and brand management company, creates and licenses multimedia content for toddlers to tweens worldwide. Genius Brands International, Inc. was founded in 2006 and is based in Beverly Hills, California. Genius Brands operates under Entertainment classification in the United States and is traded on NASDAQ Exchange. It employs 817 people. Please read more on our technical analysis page.
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Check out Risk vs Return Analysis to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in employment. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Consideration for investing in Genius Stock
If you are still planning to invest in Genius Brands Intern check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Genius Brands' history and understand the potential risks before investing.
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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.