Haverty Furniture Corporate Bonds and Leverage Analysis
| HVT-A Stock | USD 24.11 0.30 1.26% |
Haverty Furniture holds a debt-to-equity ratio of 0.854. At present, Haverty Furniture's Short Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Interest Debt Per Share is expected to grow to 3.74, whereas Short and Long Term Debt Total is forecasted to decline to about 113.3 M. With a high degree of financial leverage come high-interest payments, which usually reduce Haverty Furniture's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Haverty Furniture'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. Haverty Furniture'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 Haverty Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Haverty Furniture's stakeholders.
For most companies, including Haverty Furniture, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Haverty Furniture Companies, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Haverty Furniture's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 1.3012 | Book Value 18.758 | Operating Margin 0.0283 | Profit Margin 0.0357 | Return On Assets 0.0264 |
Haverty |
Given the importance of Haverty Furniture's capital structure, the first step in the capital decision process is for the management of Haverty Furniture 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 Haverty Furniture Companies to issue bonds at a reasonable cost.
Haverty Furniture Debt to Cash Allocation
As Haverty Furniture Companies follows its natural business cycle, the capital allocation decisions will not magically go away. Haverty Furniture'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.
Haverty Furniture Companies has accumulated 217.75 M in total debt with debt to equity ratio (D/E) of 0.85, which is about average as compared to similar companies. Haverty Furniture has a current ratio of 1.59, which is within standard range for the sector. Note, when we think about Haverty Furniture's use of debt, we should always consider it together with its cash and equity.Haverty Furniture Total Assets Over Time
Haverty Furniture Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Haverty Furniture 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.Haverty Furniture Debt Ratio | 5.43 |
Haverty Furniture Corporate Bonds Issued
Most Haverty bonds can be classified according to their maturity, which is the date when Haverty Furniture Companies 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.
Haverty Short Long Term Debt Total
Short Long Term Debt Total |
|
Understaning Haverty Furniture Use of Financial Leverage
Haverty Furniture's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Haverty Furniture's total debt position, including all outstanding debt obligations, and compares it with Haverty Furniture's equity. Financial leverage can amplify the potential profits to Haverty Furniture's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Haverty Furniture is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 217.8 M | 113.3 M | |
| Net Debt | 97.1 M | 53 M | |
| Short Term Debt | 74.7 M | 78.4 M | |
| Long Term Debt | 58.4 M | 54.9 M | |
| Short and Long Term Debt | 62.8 M | 58.4 M | |
| Net Debt To EBITDA | 1.13 | 1.07 | |
| Debt To Equity | 0.12 | 0.12 | |
| Interest Debt Per Share | 2.49 | 3.74 | |
| Debt To Assets | 0.06 | 0.05 | |
| Long Term Debt To Capitalization | 0.03 | 0.03 | |
| Total Debt To Capitalization | 0.11 | 0.10 | |
| Debt Equity Ratio | 0.12 | 0.12 | |
| Debt Ratio | 0.06 | 0.05 | |
| Cash Flow To Debt Ratio | 2.60 | 2.47 |
Also Currently Popular
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.When determining whether Haverty Furniture 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 Haverty 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 Haverty Furniture Companies Stock. Highlighted below are key reports to facilitate an investment decision about Haverty Furniture Companies Stock:Check out the analysis of Haverty Furniture Fundamentals Over Time. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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.