Platinum Asia Debt
| PAI Fund | USD 12.53 0.04 0.32% |
Platinum Asia's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Platinum Asia's financial risk is the risk to Platinum Asia stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Given that Platinum Asia'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 Platinum Asia 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 Platinum Asia to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Platinum Asia is said to be less leveraged. If creditors hold a majority of Platinum Asia's assets, the Fund is said to be highly leveraged.
Platinum |
Platinum Asia Investments Debt to Cash Allocation
The company has a current ratio of 2.98, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Debt can assist Platinum Asia until it has trouble settling it off, either with new capital or with free cash flow. So, Platinum Asia'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 Platinum Asia Investments sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Platinum to invest in growth at high rates of return. When we think about Platinum Asia's use of debt, we should always consider it together with cash and equity.Platinum Asia 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 Platinum Asia's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Platinum Asia, which in turn will lower the firm's financial flexibility.Platinum Asia Corporate Bonds Issued
Most Platinum bonds can be classified according to their maturity, which is the date when Platinum Asia Investments 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.
Understaning Platinum Asia Use of Financial Leverage
Understanding the composition and structure of Platinum Asia'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 Platinum Asia'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).
Western Asset Income Fund is a closed-ended fixed income mutual fund launched and managed by Western Asset Management Company. It is co-managed by Western Asset Management Company Limited. The fund invests in the fixed income markets of the United States. It primarily invests in investment grade debt, including government securities, bank debt, commercial paper, and cash or cash equivalents. The fund benchmarks the performance of its portfolio against the Barclays U.S. Corporate High Yield Index and the Barclays U.S. Credit Index. Western Asset Income Fund was formed on March 22, 1973 and is domiciled in the United States. Please read more on our technical analysis page.
Currently Active Assets on Macroaxis
Other Information on Investing in Platinum Fund
Platinum Asia financial ratios help investors to determine whether Platinum 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 Platinum with respect to the benefits of owning Platinum Asia 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.