Affiliated Managers Corporate Bonds and Leverage Analysis
| MGR Stock | USD 23.57 0.06 0.25% |
Affiliated Managers has over 2.54 Billion in debt which may indicate that it relies heavily on debt financing. At this time, Affiliated Managers' Debt Ratio is relatively stable compared to the past year. As of 11/25/2024, Cash Flow To Debt Ratio is likely to grow to 0.36, while Long Term Debt is likely to drop slightly above 2.2 B. . Affiliated Managers' financial risk is the risk to Affiliated Managers stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Affiliated Managers' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Affiliated Managers' 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 Affiliated Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Affiliated Managers' stakeholders.
For most companies, including Affiliated Managers, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Affiliated Managers Group, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Affiliated Managers' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Return On Equity 0.2033 |
Affiliated |
Given the importance of Affiliated Managers' capital structure, the first step in the capital decision process is for the management of Affiliated Managers 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 Affiliated Managers Group to issue bonds at a reasonable cost.
Affiliated Managers Bond Ratings
Affiliated Managers Group financial ratings play a critical role in determining how much Affiliated Managers 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 Affiliated Managers' borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (3.02) | Unlikely Manipulator | View |
Affiliated Managers Debt to Cash Allocation
Many companies such as Affiliated Managers, 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.
Affiliated Managers Group has 2.54 B in debt with debt to equity (D/E) ratio of 39.7, demonstrating that the company may be unable to create cash to meet all of its financial commitments. Note however, debt could still be an excellent tool for Affiliated to invest in growth at high rates of return. Affiliated Managers Total Assets Over Time
Affiliated Managers Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Affiliated Managers 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.Affiliated Managers Debt Ratio | 33.0 |
Affiliated Managers Corporate Bonds Issued
Affiliated Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Affiliated Managers Use of Financial Leverage
Affiliated Managers' financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Affiliated Managers' current equity. If creditors own a majority of Affiliated Managers' assets, the company is considered highly leveraged. Understanding the composition and structure of Affiliated Managers' outstanding bonds gives an idea of how risky it is and if it is worth investing in.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 2.5 B | 2.7 B | |
| Net Debt | 1.7 B | 1.8 B | |
| Short Term Debt | 39.1 M | 37.1 M | |
| Long Term Debt | 2.9 B | 2.2 B | |
| Long Term Debt Total | 2.9 B | 2.2 B | |
| Net Debt To EBITDA | 2.31 | 1.71 | |
| Debt To Equity | 0.71 | 1.00 | |
| Interest Debt Per Share | 75.82 | 79.61 | |
| Debt To Assets | 0.28 | 0.33 | |
| Long Term Debt To Capitalization | 0.41 | 0.33 | |
| Total Debt To Capitalization | 0.41 | 0.47 | |
| Debt Equity Ratio | 0.71 | 1.00 | |
| Debt Ratio | 0.28 | 0.33 | |
| Cash Flow To Debt Ratio | 0.34 | 0.36 |
Pair Trading with Affiliated Managers
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Affiliated Managers position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Affiliated Managers will appreciate offsetting losses from the drop in the long position's value.Moving against Affiliated Stock
The ability to find closely correlated positions to Affiliated Managers could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Affiliated Managers when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Affiliated Managers - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Affiliated Managers Group to buy it.
The correlation of Affiliated Managers is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Affiliated Managers moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Affiliated Managers moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Affiliated Managers can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Additional Tools for Affiliated Stock Analysis
When running Affiliated Managers' price analysis, check to measure Affiliated Managers' 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 Affiliated Managers is operating at the current time. Most of Affiliated Managers' value examination focuses on studying past and present price action to predict the probability of Affiliated Managers' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Affiliated Managers' price. Additionally, you may evaluate how the addition of Affiliated Managers 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.