Safe Pro Debt
| SPAI Stock | 3.89 0.23 5.58% |
Safe Pro'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. Safe Pro's financial risk is the risk to Safe Pro 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 Safe Pro's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Safe Pro 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 Safe Pro to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Safe Pro is said to be less leveraged. If creditors hold a majority of Safe Pro's assets, the Company is said to be highly leveraged.
Check out the analysis of Safe Pro Financial Statements. Safe Pro Bond Ratings
Safe Pro Group financial ratings play a critical role in determining how much Safe Pro 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 Safe Pro's borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (6.12) | Unlikely Manipulator | View |
Safe Pro 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 Safe Pro's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Safe Pro, which in turn will lower the firm's financial flexibility.Safe Pro Corporate Bonds Issued
Most Safe bonds can be classified according to their maturity, which is the date when Safe Pro Group 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 Safe Pro Use of Financial Leverage
Understanding the composition and structure of Safe Pro'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 Safe Pro'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).
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Check out the analysis of Safe Pro Financial Statements. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Is there potential for Construction & Engineering market expansion? Will Safe introduce new products? Factors like these will boost the valuation of Safe Pro. If investors know Safe will grow in the future, the company's valuation will be higher. Understanding fair value requires weighing current performance against future potential. All the valuation information about Safe Pro listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Safe Pro Group is measured differently than its book value, which is the value of Safe that is recorded on the company's balance sheet. Investors also form their own opinion of Safe Pro's value that differs from its market value or its book value, called intrinsic value, which is Safe Pro's true underlying value. Analysts utilize numerous techniques to assess fundamental value, seeking to purchase shares when trading prices fall beneath estimated intrinsic worth. Because Safe Pro's market value can be influenced by many factors that don't directly affect Safe Pro'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 Safe Pro's value and its price as these two are different measures arrived at by different means. Investors typically determine if Safe Pro is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. Meanwhile, Safe Pro's quoted price indicates the marketplace figure where supply meets demand through bilateral consent.
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.