Karora Resources Current Debt
| KRRGFDelisted Stock | USD 4.83 0.17 3.40% |
Karora Resources holds a debt-to-equity ratio of 0.123. . Karora Resources' financial risk is the risk to Karora Resources stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Karora Resources' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Karora Resources' cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the OTC Stock is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Karora OTC Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Karora Resources' stakeholders.
For most companies, including Karora Resources, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Karora Resources, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Karora Resources' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Karora Resources' debt-to-equity ratio measures a OTC Stock's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Karora Resources 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 Karora Resources to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Karora Resources is said to be less leveraged. If creditors hold a majority of Karora Resources' assets, the OTC Stock is said to be highly leveraged.
Karora |
Karora Resources Debt to Cash Allocation
Many companies such as Karora Resources, 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.
Karora Resources has accumulated 29.65 M in total debt with debt to equity ratio (D/E) of 0.12, which may suggest the company is not taking enough advantage from borrowing. Karora Resources has a current ratio of 1.92, which is within standard range for the sector. Debt can assist Karora Resources until it has trouble settling it off, either with new capital or with free cash flow. So, Karora Resources' 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 Karora Resources sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Karora to invest in growth at high rates of return. When we think about Karora Resources' use of debt, we should always consider it together with cash and equity.Karora Resources 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 Karora Resources' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Karora Resources, which in turn will lower the firm's financial flexibility.Understaning Karora Resources Use of Financial Leverage
Karora Resources' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Karora Resources' total debt position, including all outstanding debt obligations, and compares it with Karora Resources' equity. Financial leverage can amplify the potential profits to Karora Resources' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Karora Resources is unable to cover its debt costs.
Karora Resources Inc. operates as a multi-operational mineral resource company in Australia. Karora Resources Inc. was incorporated in 2006 and is headquartered in West Perth, Australia. Karora Resources is traded on OTC Exchange in the United States. Please read more on our technical analysis page.
Currently Active Assets on Macroaxis
Check out Correlation Analysis to better understand how to build diversified portfolios. Also, note that the market value of any otc stock could be closely tied with the direction of predictive economic indicators such as signals in price. Note that the Karora Resources information on this page should be used as a complementary analysis to other Karora Resources' statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Consideration for investing in Karora OTC Stock
If you are still planning to invest in Karora Resources 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 Karora Resources' history and understand the potential risks before investing.
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |
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.