SmartCentres Real Debt

SRU-UN Stock  CAD 25.35  0.30  1.17%   
SmartCentres Real Estate holds a debt-to-equity ratio of 0.948. At present, SmartCentres Real's Net Debt To EBITDA is projected to increase slightly based on the last few years of reporting. The current year's Debt To Equity is expected to grow to 1.89, whereas Short and Long Term Debt Total is forecasted to decline to about 2.8 B. With a high degree of financial leverage come high-interest payments, which usually reduce SmartCentres Real's Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

SmartCentres Real's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. SmartCentres Real's 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 SmartCentres Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect SmartCentres Real's stakeholders.

SmartCentres Real Quarterly Net Debt

5.07 Billion

For most companies, including SmartCentres Real, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for SmartCentres Real Estate, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, SmartCentres Real's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
0.8268
Book Value
36.455
Operating Margin
0.5461
Profit Margin
0.1338
Return On Assets
0.0312
Given that SmartCentres Real'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 SmartCentres Real 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 SmartCentres Real to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, SmartCentres Real is said to be less leveraged. If creditors hold a majority of SmartCentres Real's assets, the Company is said to be highly leveraged.
At present, SmartCentres Real's Total Current Liabilities is projected to increase significantly based on the last few years of reporting. The current year's Change To Liabilities is expected to grow to about 11.9 M, whereas Liabilities And Stockholders Equity is forecasted to decline to about 6 B.
  
Check out the analysis of SmartCentres Real Fundamentals Over Time.

SmartCentres Real Estate Debt to Cash Allocation

SmartCentres Real Estate has accumulated 5 B in total debt with debt to equity ratio (D/E) of 0.95, which is about average as compared to similar companies. SmartCentres Real Estate has a current ratio of 0.61, indicating that it has a negative working capital and may not be able to pay financial obligations in time and when they become due. Debt can assist SmartCentres Real until it has trouble settling it off, either with new capital or with free cash flow. So, SmartCentres Real'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 SmartCentres Real Estate sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for SmartCentres to invest in growth at high rates of return. When we think about SmartCentres Real's use of debt, we should always consider it together with cash and equity.

SmartCentres Real Total Assets Over Time

SmartCentres Real Assets Financed by Debt

The debt-to-assets ratio shows the degree to which SmartCentres Real 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.

SmartCentres Real Debt Ratio

    
  58.0   
It appears about 42% of SmartCentres Real's assets are financed be 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 SmartCentres Real's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of SmartCentres Real, which in turn will lower the firm's financial flexibility.

SmartCentres Real Corporate Bonds Issued

Most SmartCentres bonds can be classified according to their maturity, which is the date when SmartCentres Real Estate 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.

SmartCentres Short Long Term Debt Total

Short Long Term Debt Total

2.8 Billion

At present, SmartCentres Real's Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting.

Understaning SmartCentres Real Use of Financial Leverage

SmartCentres Real's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures SmartCentres Real's total debt position, including all outstanding debt obligations, and compares it with SmartCentres Real's equity. Financial leverage can amplify the potential profits to SmartCentres Real's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if SmartCentres Real is unable to cover its debt costs.
Last ReportedProjected for Next Year
Short and Long Term Debt TotalB2.8 B
Net DebtB2.7 B
Short Term Debt605.5 M370.2 M
Long Term Debt4.4 B4.4 B
Short and Long Term Debt605.5 M548.6 M
Net Debt To EBITDA 8.57  9.74 
Debt To Equity 0.95  1.89 
Interest Debt Per Share 28.96  21.71 
Debt To Assets 0.42  0.58 
Long Term Debt To Capitalization 0.45  0.62 
Total Debt To Capitalization 0.49  0.64 
Debt Equity Ratio 0.95  1.89 
Debt Ratio 0.42  0.58 
Cash Flow To Debt Ratio 0.07  0.05 
Please read more on our technical analysis page.

Pair Trading with SmartCentres Real

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 SmartCentres Real 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 SmartCentres Real will appreciate offsetting losses from the drop in the long position's value.
The ability to find closely correlated positions to SmartCentres Real could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace SmartCentres Real 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 SmartCentres Real - 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 SmartCentres Real Estate to buy it.
The correlation of SmartCentres Real 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 SmartCentres Real moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if SmartCentres Real Estate 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 SmartCentres Real 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.
Pair CorrelationCorrelation Matching

Other Information on Investing in SmartCentres Stock

SmartCentres Real financial ratios help investors to determine whether SmartCentres Stock 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 SmartCentres with respect to the benefits of owning SmartCentres Real security.

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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.