X-FAB Silicon Current Debt
0ROZ Stock | 4.42 0.14 3.27% |
Long Term Debt is likely to gain to about 71.6 M in 2025, whereas Short and Long Term Debt Total is likely to drop slightly above 162.1 M in 2025. . X-FAB Silicon's financial risk is the risk to X-FAB Silicon stockholders that is caused by an increase in debt.
Non Current Liabilities Total is likely to gain to about 392.6 M in 2025, whereas Total Current Liabilities is likely to drop slightly above 254.4 M in 2025. X-FAB |
X-FAB Silicon Total Assets Over Time
X-FAB Silicon 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 X-FAB Silicon's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of X-FAB Silicon, which in turn will lower the firm's financial flexibility.X-FAB Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning X-FAB Silicon Use of Financial Leverage
X-FAB Silicon's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to X-FAB Silicon's current equity. If creditors own a majority of X-FAB Silicon's assets, the company is considered highly leveraged. Understanding the composition and structure of X-FAB Silicon's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Last Reported | Projected for Next Year | ||
Short and Long Term Debt Total | 300.1 M | 162.1 M | |
Net Debt | -215.8 M | -205 M | |
Short Term Debt | 6.3 M | 6 M | |
Long Term Debt | 40 M | 71.6 M |
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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.