Shengkai Innovations Debt
| VALVDelisted Stock | USD 0.0001 0.00 0.00% |
Shengkai Innovations holds a debt-to-equity ratio of 0.03. . Shengkai Innovations' financial risk is the risk to Shengkai Innovations stockholders that is caused by an increase in debt.
Given that Shengkai Innovations' 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 Shengkai Innovations 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 Shengkai Innovations to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Shengkai Innovations is said to be less leveraged. If creditors hold a majority of Shengkai Innovations' assets, the Company is said to be highly leveraged.
Shengkai |
Shengkai Innovations Debt to Cash Allocation
Many companies such as Shengkai Innovations, 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.
The company has a current ratio of 33.34, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Shengkai Innovations until it has trouble settling it off, either with new capital or with free cash flow. So, Shengkai Innovations' 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 Shengkai Innovations sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Shengkai to invest in growth at high rates of return. When we think about Shengkai Innovations' use of debt, we should always consider it together with cash and equity.Shengkai Innovations 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 Shengkai Innovations' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Shengkai Innovations, which in turn will lower the firm's financial flexibility.Shengkai Innovations Corporate Bonds Issued
Understaning Shengkai Innovations Use of Financial Leverage
Understanding the structure of Shengkai Innovations' debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Shengkai Innovations' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Shengkai Innovations, Inc., together with its subsidiaries, designs, manufactures, and distributes ceramic valves for industrial use in the Peoples Republic of China. The company is headquartered in Tianjin, the Peoples Republic of China. SHENGKAI INNOVATIONS operates under Industrial Distribution classification in the United States and is traded on PNK Exchange. It employs 135 people. Please read more on our technical analysis page.
Thematic Opportunities
Explore Investment Opportunities
Check out World Market Map to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in bureau of economic analysis. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Consideration for investing in Shengkai Pink Sheet
If you are still planning to invest in Shengkai Innovations check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Shengkai Innovations' history and understand the potential risks before investing.
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stocks Directory Find actively traded stocks across global 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.