Allianzgi Convertible Debt
| NCV Fund | USD 3.68 0.02 0.55% |
Allianzgi Convertible holds a debt-to-equity ratio of 0.04. . Allianzgi Convertible's financial risk is the risk to Allianzgi Convertible stockholders that is caused by an increase in debt.
Given that Allianzgi Convertible's debt-to-equity ratio measures a Fund's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Allianzgi Convertible 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 Allianzgi Convertible to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Allianzgi Convertible is said to be less leveraged. If creditors hold a majority of Allianzgi Convertible's assets, the Fund is said to be highly leveraged.
Allianzgi |
Allianzgi Convertible Debt to Cash Allocation
Many companies such as Allianzgi Convertible, 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.
Allianzgi Convertible Income has 36.82 M in debt with debt to equity (D/E) ratio of 0.04, which may show that the company is not taking advantage of profits from borrowing. Allianzgi Convertible has a current ratio of 0.49, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist Allianzgi Convertible until it has trouble settling it off, either with new capital or with free cash flow. So, Allianzgi Convertible'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 Allianzgi Convertible sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Allianzgi to invest in growth at high rates of return. When we think about Allianzgi Convertible's use of debt, we should always consider it together with cash and equity.Allianzgi Convertible 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 Allianzgi Convertible's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Allianzgi Convertible, which in turn will lower the firm's financial flexibility.Allianzgi Convertible Corporate Bonds Issued
Understaning Allianzgi Convertible Use of Financial Leverage
Understanding the structure of Allianzgi Convertible's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Allianzgi Convertible'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.
Virtus Convertible Income Fund is a closed ended fixed income mutual fund launched and managed by Allianz Global Investors Fund Management LLC. The fund is co-managed by Allianz Global Investors U.S. LLC. It invests in fixed income markets of the United States. The fund primarily invests in convertible securities and non-convertible high-yield bonds rated below investment grade. It invests in securities with a broad range of maturities, with a weighted average maturity ranging between five to ten years. The fund employs fundamental analysis with a bottom up stock picking approach to create its portfolio. It conducts in house research using proprietary models. The fund was formerly known as AGIC Convertible Income Fund. Virtus Convertible Income Fund was formed on March 31, 2003 and is domiciled in the United States. Please read more on our technical analysis page.
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Other Information on Investing in Allianzgi Fund
Allianzgi Convertible financial ratios help investors to determine whether Allianzgi Fund is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Allianzgi with respect to the benefits of owning Allianzgi Convertible security.
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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.