MKS Instruments Corporate Bonds and Leverage Analysis
| MKSI Stock | USD 114.92 1.21 1.06% |
MKS Instruments holds a debt-to-equity ratio of 1.261. As of now, MKS Instruments' Long Term Debt is increasing as compared to previous years. The MKS Instruments' current Short and Long Term Debt is estimated to increase to about 112.3 M, while Net Debt To EBITDA is forecasted to increase to (3.35). With a high degree of financial leverage come high-interest payments, which usually reduce MKS Instruments' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
MKS Instruments' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. MKS Instruments' 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 MKS Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect MKS Instruments' stakeholders.
For most companies, including MKS Instruments, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for MKS Instruments, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, MKS Instruments' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 3.2252 | Book Value 35.632 | Operating Margin 0.1496 | Profit Margin 0.0085 | Return On Assets 0.0347 |
MKS |
Given the importance of MKS Instruments' capital structure, the first step in the capital decision process is for the management of MKS Instruments 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 MKS Instruments to issue bonds at a reasonable cost.
MKS Instruments Bond Ratings
MKS Instruments financial ratings play a critical role in determining how much MKS Instruments 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 MKS Instruments' borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (3.37) | Unlikely Manipulator | View |
MKS Instruments Debt to Cash Allocation
As MKS Instruments follows its natural business cycle, the capital allocation decisions will not magically go away. MKS Instruments' 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.
MKS Instruments currently holds 5.02 B in liabilities with Debt to Equity (D/E) ratio of 1.26, which is about average as compared to similar companies. MKS Instruments has a current ratio of 2.7, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about MKS Instruments' use of debt, we should always consider it together with its cash and equity.MKS Instruments Total Assets Over Time
MKS Instruments Assets Financed by Debt
The debt-to-assets ratio shows the degree to which MKS Instruments 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.MKS Instruments Debt Ratio | 55.0 |
MKS Instruments Corporate Bonds Issued
Most MKS bonds can be classified according to their maturity, which is the date when MKS Instruments 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.
MKS Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning MKS Instruments Use of Financial Leverage
Understanding the composition and structure of MKS Instruments' 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 MKS Instruments' 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 | 5 B | 5.3 B | |
| Net Debt | 4.1 B | 4.4 B | |
| Short Term Debt | 123 M | 129.2 M | |
| Long Term Debt | 4.7 B | 4.9 B | |
| Short and Long Term Debt | 107 M | 112.3 M | |
| Long Term Debt Total | 5.6 B | 5.8 B | |
| Net Debt To EBITDA | (3.53) | (3.35) | |
| Debt To Equity | 1.94 | 2.03 | |
| Interest Debt Per Share | 77.02 | 80.87 | |
| Debt To Assets | 0.53 | 0.55 | |
| Long Term Debt To Capitalization | 0.66 | 0.69 | |
| Total Debt To Capitalization | 0.66 | 0.69 | |
| Debt Equity Ratio | 1.94 | 2.03 | |
| Debt Ratio | 0.53 | 0.55 | |
| Cash Flow To Debt Ratio | 0.07 | 0.06 |
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When determining whether MKS Instruments offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of MKS Instruments' 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 Mks Instruments Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Mks Instruments Stock:Check out the analysis of MKS Instruments Fundamentals Over Time. For more detail on how to invest in MKS Stock please use our How to Invest in MKS Instruments guide.You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Is Semiconductors & Semiconductor Equipment 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 MKS Instruments. If investors know MKS 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 MKS Instruments 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 0.586 | Dividend Share 0.88 | Earnings Share 0.46 | Revenue Per Share 52.817 | Quarterly Revenue Growth (0.04) |
The market value of MKS Instruments is measured differently than its book value, which is the value of MKS that is recorded on the company's balance sheet. Investors also form their own opinion of MKS Instruments' value that differs from its market value or its book value, called intrinsic value, which is MKS Instruments' 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 MKS Instruments' market value can be influenced by many factors that don't directly affect MKS Instruments' 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 MKS Instruments' value and its price as these two are different measures arrived at by different means. Investors typically determine if MKS Instruments is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, MKS Instruments' 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.