True North Commercial 404280DR7 Bond
| TNT-UN Stock | CAD 11.21 0.23 2.01% |
True North Commercial has over 820.99 Million in debt which may indicate that it relies heavily on debt financing. At present, True North's Interest Debt Per Share is projected to increase significantly based on the last few years of reporting. The current year's Debt To Assets is expected to grow to 0.65, whereas Short and Long Term Debt Total is forecasted to decline to about 531.1 M. With a high degree of financial leverage come high-interest payments, which usually reduce True North's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
True North'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. True North'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 True Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect True North's stakeholders.
For most companies, including True North, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for True North Commercial, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, True North'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 0.3747 | Book Value 28.884 | Operating Margin 0.4941 | Profit Margin (0.39) | Return On Assets 0.0297 |
True |
Given the importance of True North's capital structure, the first step in the capital decision process is for the management of True North 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 True North Commercial to issue bonds at a reasonable cost.
| Popular Name | True North HSBC Holdings PLC |
| Specialization | Equity Real Estate Investment Trusts (REITs) |
| Equity ISIN Code | CA89784Y2096 |
| Bond Issue ISIN Code | US404280DR76 |
| S&P Rating | Others |
| Maturity Date | 3rd of November 2028 |
| Issuance Date | 3rd of November 2022 |
| Coupon | 7.39 % |
True North Commercial Outstanding Bond Obligations
| Boeing Co 2196 | US097023DG73 | Details | |
| HSBC Holdings PLC | US404280DR76 | Details |
Understaning True North Use of Financial Leverage
True North's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures True North's total debt position, including all outstanding debt obligations, and compares it with True North's equity. Financial leverage can amplify the potential profits to True North's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if True North is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 821 M | 531.1 M | |
| Net Debt | 812 M | 522.4 M | |
| Short Term Debt | 126.6 M | 66.4 M | |
| Long Term Debt | 694.4 M | 511.8 M | |
| Short and Long Term Debt | 126.6 M | 83.8 M | |
| Net Debt To EBITDA | (104.11) | (98.90) | |
| Debt To Equity | 1.81 | 1.16 | |
| Interest Debt Per Share | 51.99 | 54.59 | |
| Debt To Assets | 0.62 | 0.65 | |
| Long Term Debt To Capitalization | 0.61 | 0.64 | |
| Total Debt To Capitalization | 0.64 | 0.68 | |
| Debt Equity Ratio | 1.81 | 1.16 | |
| Debt Ratio | 0.62 | 0.65 | |
| Cash Flow To Debt Ratio | 0.09 | 0.07 |
Pair Trading with True North
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 True North 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 True North will appreciate offsetting losses from the drop in the long position's value.Moving against True Stock
| 0.31 | MATE | Blockmate Ventures Earnings Call Tomorrow | PairCorr |
The ability to find closely correlated positions to True North could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace True North 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 True North - 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 True North Commercial to buy it.
The correlation of True North 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 True North moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if True North Commercial 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 True North 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 True Stock
True North financial ratios help investors to determine whether True 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 True with respect to the benefits of owning True North 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.