Tanger Factory Outlet Corporate Bonds and Leverage Analysis
| T6O Stock | EUR 34.83 0.02 0.06% |
Tanger Factory Outlet holds a debt-to-equity ratio of 2.788. . Tanger Factory's financial risk is the risk to Tanger Factory stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Tanger Factory'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. Tanger Factory'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 Tanger Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Tanger Factory's stakeholders.
For most companies, including Tanger Factory, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Tanger Factory Outlet, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Tanger Factory's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Tanger |
Given the importance of Tanger Factory's capital structure, the first step in the capital decision process is for the management of Tanger Factory to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Tanger Factory Outlet to issue bonds at a reasonable cost.
Tanger Factory Outlet Debt to Cash Allocation
Many companies such as Tanger Factory, 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.
Tanger Factory Outlet has accumulated 1.43 B in total debt with debt to equity ratio (D/E) of 2.79, implying the company greatly relies on financing operations through barrowing. Tanger Factory Outlet has a current ratio of 1.58, which is within standard range for the sector. Debt can assist Tanger Factory until it has trouble settling it off, either with new capital or with free cash flow. So, Tanger Factory'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 Tanger Factory Outlet sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Tanger to invest in growth at high rates of return. When we think about Tanger Factory's use of debt, we should always consider it together with cash and equity.Tanger Factory 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 Tanger Factory's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Tanger Factory, which in turn will lower the firm's financial flexibility.Tanger Factory Corporate Bonds Issued
Most Tanger bonds can be classified according to their maturity, which is the date when Tanger Factory Outlet 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 Tanger Factory Use of Financial Leverage
Tanger Factory's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Tanger Factory's total debt position, including all outstanding debt obligations, and compares it with Tanger Factory's equity. Financial leverage can amplify the potential profits to Tanger Factory's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Tanger Factory is unable to cover its debt costs.
is a leading operator of open-air upscale outlet shopping centers that owns, or has an ownership interest in, a portfolio of 38 centers. Tanger is furnishing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended September 30, 2020. TANGER FACT operates under REITRetail classification in Germany and is traded on Frankfurt Stock Exchange. It employs 262 people. Please read more on our technical analysis page.
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Additional Information and Resources on Investing in Tanger Stock
When determining whether Tanger Factory Outlet is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if Tanger Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Tanger Factory Outlet Stock. Highlighted below are key reports to facilitate an investment decision about Tanger Factory Outlet Stock:Check out the analysis of Tanger Factory Fundamentals Over Time. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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.