Wetouch Technology Debt
| WETH Stock | USD 1.78 0.02 1.11% |
Wetouch Technology Common holds a debt-to-equity ratio of 0.03. With a high degree of financial leverage come high-interest payments, which usually reduce Wetouch Technology's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Wetouch Technology'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. Wetouch Technology's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the OTC Stock is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Wetouch OTC Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Wetouch Technology's stakeholders.
For most companies, including Wetouch Technology, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Wetouch Technology Common, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Wetouch Technology'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 Wetouch Technology's debt-to-equity ratio measures a OTC Stock's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Wetouch Technology 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 Wetouch Technology to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Wetouch Technology is said to be less leveraged. If creditors hold a majority of Wetouch Technology's assets, the OTC Stock is said to be highly leveraged.
Wetouch |
Wetouch Technology Common Debt to Cash Allocation
Wetouch Technology Common currently holds 1.99 M in liabilities with Debt to Equity (D/E) ratio of 0.03, which may suggest the company is not taking enough advantage from borrowing. Wetouch Technology Common has a current ratio of 9.95, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Wetouch Technology until it has trouble settling it off, either with new capital or with free cash flow. So, Wetouch Technology'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 Wetouch Technology Common sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Wetouch to invest in growth at high rates of return. When we think about Wetouch Technology's use of debt, we should always consider it together with cash and equity.Wetouch Technology 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 Wetouch Technology's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Wetouch Technology, which in turn will lower the firm's financial flexibility.Wetouch Technology Corporate Bonds Issued
Most Wetouch bonds can be classified according to their maturity, which is the date when Wetouch Technology Common 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 Wetouch Technology Use of Financial Leverage
Understanding the composition and structure of Wetouch Technology's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Wetouch Technology's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Wetouch Technology Inc. engages in the research, development, manufacture, sale, and servicing of medium to large sized projected capacitive touchscreens in the Peoples Republic of China, Taiwan, South Korea, and internationally. The company was founded in 2011 and is based in Meishan, China. Wetouch Technology operates under Real Estate Services classification in the United States and is traded on OTC Exchange. It employs 126 people. Please read more on our technical analysis page.
Currently Active Assets on Macroaxis
Other Information on Investing in Wetouch OTC Stock
Wetouch Technology financial ratios help investors to determine whether Wetouch OTC 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 Wetouch with respect to the benefits of owning Wetouch Technology 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.