SIR Royalty Current Debt
| SRV-UN Stock | CAD 12.86 0.27 2.14% |
At present, SIR Royalty's Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting. The current year's Interest Debt Per Share is expected to grow to 0.53, whereas Net Debt is forecasted to decline to (388.2 K). With a high degree of financial leverage come high-interest payments, which usually reduce SIR Royalty's Earnings Per Share (EPS).
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.0 | Current Value 0.0 | Quarterly Volatility 0.0 |
SIR |
SIR Royalty Income Debt to Cash Allocation
SIR Royalty Income has accumulated 42.47 K in total debt. SIR Royalty Income has a current ratio of 1.18, suggesting that it may have difficulties to pay its financial obligations in time and when they become due. Debt can assist SIR Royalty until it has trouble settling it off, either with new capital or with free cash flow. So, SIR Royalty'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 SIR Royalty Income sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for SIR to invest in growth at high rates of return. When we think about SIR Royalty's use of debt, we should always consider it together with cash and equity.SIR Royalty Total Assets Over Time
SIR Royalty 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 SIR Royalty's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of SIR Royalty, which in turn will lower the firm's financial flexibility.SIR Net Debt
Net Debt |
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Understaning SIR Royalty Use of Financial Leverage
SIR Royalty's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures SIR Royalty's total debt position, including all outstanding debt obligations, and compares it with SIR Royalty's equity. Financial leverage can amplify the potential profits to SIR Royalty's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if SIR Royalty is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Net Debt | -369.7 K | -388.2 K | |
| Short and Long Term Debt Total | 42.5 K | 44.9 K | |
| Net Debt To EBITDA | (0.02) | (0.02) | |
| Interest Debt Per Share | 0.41 | 0.53 |
Pair Trading with SIR Royalty
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 SIR Royalty 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 SIR Royalty will appreciate offsetting losses from the drop in the long position's value.Moving together with SIR Stock
Moving against SIR Stock
The ability to find closely correlated positions to SIR Royalty could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace SIR Royalty 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 SIR Royalty - 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 SIR Royalty Income to buy it.
The correlation of SIR Royalty 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 SIR Royalty moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if SIR Royalty Income 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 SIR Royalty 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.Other Information on Investing in SIR Stock
SIR Royalty financial ratios help investors to determine whether SIR 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 SIR with respect to the benefits of owning SIR Royalty 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.