Townsquare Media Corporate Bonds and Leverage Analysis

TSQ Stock  USD 10.03  0.04  0.40%   
Townsquare Media has over 552 Million in debt which may indicate that it relies heavily on debt financing. At this time, Townsquare Media's Cash Flow To Debt Ratio is relatively stable compared to the past year. . Townsquare Media's financial risk is the risk to Townsquare Media stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Townsquare Media'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. Townsquare Media'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 Townsquare Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Townsquare Media's stakeholders.
For most companies, including Townsquare Media, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Townsquare Media, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Townsquare Media'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
29.1906
Book Value
(3.60)
Operating Margin
0.153
Profit Margin
(0.09)
Return On Assets
0.0598
At this time, Townsquare Media's Liabilities And Stockholders Equity is relatively stable compared to the past year. As of 11/22/2024, Non Current Liabilities Total is likely to grow to about 642.8 M, while Total Current Liabilities is likely to drop slightly above 61.9 M.
  
Check out the analysis of Townsquare Media Fundamentals Over Time.
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View Bond Profile
Given the importance of Townsquare Media's capital structure, the first step in the capital decision process is for the management of Townsquare Media 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 Townsquare Media to issue bonds at a reasonable cost.

Townsquare Media Debt to Cash Allocation

Townsquare Media has 552 M in debt with debt to equity (D/E) ratio of 9.69, demonstrating that the company may be unable to create cash to meet all of its financial commitments. Townsquare Media has a current ratio of 1.23, demonstrating that it may have difficulties to pay its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Townsquare to invest in growth at high rates of return.

Townsquare Media Total Assets Over Time

Townsquare Media Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Townsquare Media 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.

Townsquare Media Debt Ratio

    
  51.0   
It seems slightly above 49% of Townsquare Media'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 Townsquare Media's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Townsquare Media, which in turn will lower the firm's financial flexibility.

Townsquare Media Corporate Bonds Issued

Townsquare Long Term Debt

Long Term Debt

362.69 Million

At this time, Townsquare Media's Long Term Debt is relatively stable compared to the past year.

Understaning Townsquare Media Use of Financial Leverage

Townsquare Media's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Townsquare Media's current equity. If creditors own a majority of Townsquare Media's assets, the company is considered highly leveraged. Understanding the composition and structure of Townsquare Media's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Last ReportedProjected for Next Year
Long Term Debt499.7 M362.7 M
Short and Long Term Debt Total552 M620.1 M
Net Debt491 M562.6 M
Short Term Debt9.6 M8.2 M
Long Term Debt Total472 M439.9 M
Short and Long Term Debt11.4 M12 M
Net Debt To EBITDA 67.39  70.76 
Debt To Equity 77.95  81.85 
Interest Debt Per Share 32.14  44.21 
Debt To Assets 0.77  0.51 
Long Term Debt To Capitalization 0.99  0.58 
Total Debt To Capitalization 0.99  0.59 
Debt Equity Ratio 77.95  81.85 
Debt Ratio 0.77  0.51 
Cash Flow To Debt Ratio 0.14  0.14 
Please read more on our technical analysis page.

Additional Tools for Townsquare Stock Analysis

When running Townsquare Media's price analysis, check to measure Townsquare Media's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Townsquare Media is operating at the current time. Most of Townsquare Media's value examination focuses on studying past and present price action to predict the probability of Townsquare Media's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Townsquare Media's price. Additionally, you may evaluate how the addition of Townsquare Media to your portfolios can decrease your overall portfolio volatility.

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.