Lixiang Education Holding Corporate Bonds and Leverage Analysis
| LXEH Stock | USD 2.51 0.13 5.46% |
Lixiang Education Holding holds a debt-to-equity ratio of 0.721. As of now, Lixiang Education's Debt To Equity is decreasing as compared to previous years. The Lixiang Education's current Interest Debt Per Share is estimated to increase to 129.37, while Net Debt is forecasted to increase to (141.9 M). With a high degree of financial leverage come high-interest payments, which usually reduce Lixiang Education's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Lixiang Education'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. Lixiang Education'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 Lixiang Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Lixiang Education's stakeholders.
For most companies, including Lixiang Education, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Lixiang Education Holding, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Lixiang Education'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 0.1175 | Book Value 146.907 | Operating Margin (0.62) | Return On Assets (0.11) | Return On Equity (0.49) |
Lixiang |
Given the importance of Lixiang Education's capital structure, the first step in the capital decision process is for the management of Lixiang Education 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 Lixiang Education Holding to issue bonds at a reasonable cost.
Lixiang Education Bond Ratings
Lixiang Education Holding financial ratings play a critical role in determining how much Lixiang Education 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 Lixiang Education's borrowing costs.| Piotroski F Score | 5 | Healthy | View |
| Beneish M Score | (1.55) | Possible Manipulator | View |
Lixiang Education Holding Debt to Cash Allocation
As Lixiang Education Holding follows its natural business cycle, the capital allocation decisions will not magically go away. Lixiang Education'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.
Lixiang Education Holding currently holds 77.72 M in liabilities with Debt to Equity (D/E) ratio of 0.72, which is about average as compared to similar companies. Lixiang Education Holding has a current ratio of 0.62, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Lixiang Education's use of debt, we should always consider it together with its cash and equity.Lixiang Education Total Assets Over Time
Lixiang Education Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Lixiang Education 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.Lixiang Education Debt Ratio | 20.0 |
Lixiang Education Corporate Bonds Issued
Most Lixiang bonds can be classified according to their maturity, which is the date when Lixiang Education Holding 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.
Lixiang Short Long Term Debt Total
Short Long Term Debt Total |
|
Understaning Lixiang Education Use of Financial Leverage
Understanding the composition and structure of Lixiang Education's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Lixiang Education's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 77.7 M | 78.4 M | |
| Net Debt | -149.3 M | -141.9 M | |
| Short and Long Term Debt | 75.2 M | 76.3 M | |
| Short Term Debt | 77.7 M | 73.5 M | |
| Long Term Debt | 1.4 M | 1.3 M | |
| Net Debt To EBITDA | 1.75 | 1.83 | |
| Debt To Equity | 0.48 | 0.48 | |
| Interest Debt Per Share | 81.84 | 129.37 | |
| Debt To Assets | 0.17 | 0.20 | |
| Total Debt To Capitalization | 0.32 | 0.32 | |
| Debt Equity Ratio | 0.48 | 0.48 | |
| Debt Ratio | 0.17 | 0.20 | |
| Cash Flow To Debt Ratio | (0.79) | (0.75) |
Currently Active Assets on Macroaxis
When determining whether Lixiang Education Holding offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Lixiang Education's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Lixiang Education Holding Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Lixiang Education Holding Stock:Check out the analysis of Lixiang Education Fundamentals Over Time. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Is Hotels, Restaurants & Leisure 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 Lixiang Education. If investors know Lixiang 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 Lixiang Education 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 (0.23) | Earnings Share (17.51) | Revenue Per Share 39.489 | Quarterly Revenue Growth (0.41) | Return On Assets (0.11) |
The market value of Lixiang Education Holding is measured differently than its book value, which is the value of Lixiang that is recorded on the company's balance sheet. Investors also form their own opinion of Lixiang Education's value that differs from its market value or its book value, called intrinsic value, which is Lixiang Education'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 Lixiang Education's market value can be influenced by many factors that don't directly affect Lixiang Education'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 Lixiang Education's value and its price as these two are different measures arrived at by different means. Investors typically determine if Lixiang Education is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Lixiang Education'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.