Yung Zip Debt

4102 Stock  TWD 30.50  0.35  1.16%   
Yung Zip Chemical has over 189.75 Million in debt which may indicate that it relies heavily on debt financing. . Yung Zip's financial risk is the risk to Yung Zip stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Yung Zip'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. Yung Zip's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Yung Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Yung Zip's stakeholders.
For most companies, including Yung Zip, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Yung Zip Chemical, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Yung Zip'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 Yung Zip's 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 Yung Zip 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 Yung Zip to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Yung Zip is said to be less leveraged. If creditors hold a majority of Yung Zip's assets, the Company is said to be highly leveraged.
  
Check out the analysis of Yung Zip Fundamentals Over Time.

Yung Zip Chemical Debt to Cash Allocation

Many companies such as Yung Zip, 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.
Yung Zip Chemical has accumulated 189.75 M in total debt with debt to equity ratio (D/E) of 13.8, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Yung Zip Chemical has a current ratio of 3.48, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Yung Zip until it has trouble settling it off, either with new capital or with free cash flow. So, Yung Zip'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 Yung Zip Chemical sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Yung to invest in growth at high rates of return. When we think about Yung Zip's use of debt, we should always consider it together with cash and equity.

Yung Zip 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 Yung Zip's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Yung Zip, which in turn will lower the firm's financial flexibility.

Yung Zip Corporate Bonds Issued

Understaning Yung Zip Use of Financial Leverage

Understanding the structure of Yung Zip's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Yung Zip's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Co., Ltd. manufactures and supplies active pharmaceutical ingredients in Taiwan. The company was founded in 1978 and is based in Taichung City, Taiwan. YUNG ZIP operates under Drug Manufacturers - Major classification in Taiwan and is traded on Taiwan OTC Exchange. It employs 150 people.
Please read more on our technical analysis page.

Pair Trading with Yung Zip

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 Yung Zip 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 Yung Zip will appreciate offsetting losses from the drop in the long position's value.

Moving together with Yung Stock

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Moving against Yung Stock

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The ability to find closely correlated positions to Yung Zip could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Yung Zip 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 Yung Zip - 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 Yung Zip Chemical to buy it.
The correlation of Yung Zip 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 Yung Zip moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Yung Zip Chemical 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 Yung Zip 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.
Pair CorrelationCorrelation Matching

Additional Tools for Yung Stock Analysis

When running Yung Zip's price analysis, check to measure Yung Zip's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Yung Zip is operating at the current time. Most of Yung Zip's value examination focuses on studying past and present price action to predict the probability of Yung Zip's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Yung Zip's price. Additionally, you may evaluate how the addition of Yung Zip to your portfolios can decrease your overall portfolio volatility.

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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.