Virtus Global Debt
| ZTR Fund | USD 6.23 0.04 0.65% |
Virtus Global Dividend holds a debt-to-equity ratio of 0.379. . Virtus Global's financial risk is the risk to Virtus Global stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Virtus Global'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. Virtus Global'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 Virtus Fund's retail investors understand whether an upcoming fall or rise in the market will negatively affect Virtus Global's stakeholders.
For most companies, including Virtus Global, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Virtus Global Dividend, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Virtus Global'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 Virtus Global'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 Virtus Global 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 Virtus Global to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Virtus Global is said to be less leveraged. If creditors hold a majority of Virtus Global's assets, the Fund is said to be highly leveraged.
Virtus |
Virtus Global Dividend Debt to Cash Allocation
Many companies such as Virtus Global, 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.
Virtus Global Dividend has 159.75 M in debt with debt to equity (D/E) ratio of 0.38, which is OK given its current industry classification. Virtus Global Dividend has a current ratio of 0.08, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist Virtus Global until it has trouble settling it off, either with new capital or with free cash flow. So, Virtus Global'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 Virtus Global Dividend sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Virtus to invest in growth at high rates of return. When we think about Virtus Global's use of debt, we should always consider it together with cash and equity.Virtus Global 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 Virtus Global's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Virtus Global, which in turn will lower the firm's financial flexibility.Virtus Global Corporate Bonds Issued
Understaning Virtus Global Use of Financial Leverage
Virtus Global's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Virtus Global's current equity. If creditors own a majority of Virtus Global's assets, the company is considered highly leveraged. Understanding the composition and structure of Virtus Global's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Virtus Global Dividend Income Fund Inc. is a closed-ended balanced mutual fund launched by Virtus Investment Partners, Inc. The fund is co-managed by Virtus Investment Advisers, Inc., Kayne Anderson Rudnick Investment Management LLC and Newfleet Asset Management, LLC. It invests in the public equity and fixed income markets of the United States. The fund seeks to invest in securities of companies operating across diversified sectors. It primarily invests in reasonably priced growth stocks of large cap companies and investment grade bonds issued by companies and governments. The fund is actively managed. It benchmarks the performance of its portfolio against a composite index comprised of 60 percent Russell Developed Large Cap Index and 40 percent Bloomberg Barclays U.S. Aggregate Bond Index. The fund was formerly known as The Zweig Total Return Fund, Inc. Virtus Global Dividend Income Fund Inc. was formed on September 30, 1988 and is domiciled in the United States. Please read more on our technical analysis page.
Pair Trading with Virtus Global
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 Virtus Global 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 Virtus Global will appreciate offsetting losses from the drop in the long position's value.The ability to find closely correlated positions to Virtus Global could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Virtus Global 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 Virtus Global - 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 Virtus Global Dividend to buy it.
The correlation of Virtus Global 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 Virtus Global moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Virtus Global Dividend 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 Virtus Global 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 Virtus Fund
Virtus Global financial ratios help investors to determine whether Virtus 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 Virtus with respect to the benefits of owning Virtus Global security.
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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.