Invesco Senior Debt
| VVR Fund | USD 4.12 0.01 0.24% |
Invesco Senior Income holds a debt-to-equity ratio of 0.393. . Invesco Senior's financial risk is the risk to Invesco Senior stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Invesco Senior'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. Invesco Senior's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Fund is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Invesco Fund's retail investors understand whether an upcoming fall or rise in the market will negatively affect Invesco Senior's stakeholders.
For most companies, including Invesco Senior, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Invesco Senior Income, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Invesco Senior's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Invesco Senior's debt-to-equity ratio measures a Fund's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Invesco Senior 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 Invesco Senior to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Invesco Senior is said to be less leveraged. If creditors hold a majority of Invesco Senior's assets, the Fund is said to be highly leveraged.
Invesco |
Invesco Senior Income Debt to Cash Allocation
Many companies such as Invesco Senior, 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.
Invesco Senior Income has 282.87 M in debt with debt to equity (D/E) ratio of 0.39, which is OK given its current industry classification. Invesco Senior Income has a current ratio of 0.6, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist Invesco Senior until it has trouble settling it off, either with new capital or with free cash flow. So, Invesco Senior'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 Invesco Senior Income sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Invesco to invest in growth at high rates of return. When we think about Invesco Senior's use of debt, we should always consider it together with cash and equity.
Invesco Senior 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 Invesco Senior's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Invesco Senior, which in turn will lower the firm's financial flexibility.Invesco Senior Corporate Bonds Issued
Understaning Invesco Senior Use of Financial Leverage
Invesco Senior's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Invesco Senior's current equity. If creditors own a majority of Invesco Senior's assets, the company is considered highly leveraged. Understanding the composition and structure of Invesco Senior's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Invesco Senior Income Trust is a closed ended fixed income mutual fund launched by Invesco Ltd. It is co-managed by Invesco Advisers, Inc., Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc., and Invesco Canada Ltd. The fund invests in the fixed income markets of the United States. It primarily invests in a portfolio of interests in floating or variable rate senior loans to corporations, partnerships, and other entities which operate in a variety of industries and geographical regions. The fund typically employs fundamental analysis with a bottom up stock picking approach to create its portfolio. It benchmarks the performance of its portfolio against the Credit Suisse Leveraged Loan Index. The fund was formerly known as Invesco Van Kampen Senior Income Trust and Van Kampen Senior Income Trust. Invesco Senior Income Trust was formed on June 23, 1998 and is domiciled in the United States. Please read more on our technical analysis page.
Other Information on Investing in Invesco Fund
Invesco Senior financial ratios help investors to determine whether Invesco Fund 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 Invesco with respect to the benefits of owning Invesco Senior security.
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |
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.