Canada Rare Debt
| LL Stock | CAD 0.01 0.01 25.00% |
Canada Rare Earth holds a debt-to-equity ratio of 0.819. At this time, Canada Rare's Net Debt is fairly stable compared to the past year. Cash Flow To Debt Ratio is likely to climb to 0.94 in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 520.1 K in 2024. . Canada Rare's financial risk is the risk to Canada Rare stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Canada Rare'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. Canada Rare'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 Canada Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Canada Rare's stakeholders.
For most companies, including Canada Rare, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Canada Rare Earth, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Canada Rare'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 106.8205 | Book Value (0.01) | Operating Margin (7.24) | Profit Margin (1.00) | Return On Assets (0.20) |
Given that Canada Rare's 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 Canada Rare 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 Canada Rare to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Canada Rare is said to be less leveraged. If creditors hold a majority of Canada Rare's assets, the Company is said to be highly leveraged.
At this time, Canada Rare's Total Current Liabilities is fairly stable compared to the past year. Non Current Liabilities Total is likely to climb to about 1.2 M in 2024, whereas Liabilities And Stockholders Equity is likely to drop slightly above 3 M in 2024. Canada |
Canada Rare Earth Debt to Cash Allocation
Many companies such as Canada Rare, 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.
Canada Rare Earth currently holds 729.91 K in liabilities with Debt to Equity (D/E) ratio of 0.82, which is about average as compared to similar companies. Canada Rare Earth has a current ratio of 0.43, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist Canada Rare until it has trouble settling it off, either with new capital or with free cash flow. So, Canada Rare's 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 Canada Rare Earth sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Canada to invest in growth at high rates of return. When we think about Canada Rare's use of debt, we should always consider it together with cash and equity.Canada Rare Total Assets Over Time
Canada Rare Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Canada Rare 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.Canada Rare Debt Ratio | 23.0 |
Canada Rare Corporate Bonds Issued
Canada Net Debt
Net Debt |
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Understaning Canada Rare Use of Financial Leverage
Understanding the structure of Canada Rare's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Canada Rare's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
| Last Reported | Projected for Next Year | ||
| Net Debt | 508.3 K | 533.8 K | |
| Short and Long Term Debt Total | 729.9 K | 520.1 K | |
| Short Term Debt | 632.1 K | 424.2 K | |
| Short and Long Term Debt | 1.2 M | 713.1 K | |
| Long Term Debt | 465 K | 413.3 K | |
| Net Debt To EBITDA | (0.49) | (0.47) | |
| Debt To Equity | (0.97) | (0.92) | |
| Debt To Assets | 0.25 | 0.23 | |
| Long Term Debt To Capitalization | (0.14) | (0.13) | |
| Total Debt To Capitalization | (30.68) | (29.15) | |
| Debt Equity Ratio | (0.97) | (0.92) | |
| Debt Ratio | 0.25 | 0.23 | |
| Cash Flow To Debt Ratio | 0.90 | 0.94 |
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Additional Tools for Canada Stock Analysis
When running Canada Rare's price analysis, check to measure Canada Rare's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Canada Rare is operating at the current time. Most of Canada Rare's value examination focuses on studying past and present price action to predict the probability of Canada Rare's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Canada Rare's price. Additionally, you may evaluate how the addition of Canada Rare to your portfolios can decrease your overall portfolio volatility.
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.