Asia Sermkij Debt
| ASK Stock | THB 7.55 0.40 5.59% |
Asia Sermkij Leasing has over 24.11 Billion in debt which may indicate that it relies heavily on debt financing. . Asia Sermkij's financial risk is the risk to Asia Sermkij stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Asia Sermkij'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. Asia Sermkij'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 Asia Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Asia Sermkij's stakeholders.
For most companies, including Asia Sermkij, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Asia Sermkij Leasing, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Asia Sermkij'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 Asia Sermkij'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 Asia Sermkij 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 Asia Sermkij to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Asia Sermkij is said to be less leveraged. If creditors hold a majority of Asia Sermkij's assets, the Company is said to be highly leveraged.
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Asia Sermkij Leasing Debt to Cash Allocation
Asia Sermkij Leasing has accumulated 24.11 B in total debt with debt to equity ratio (D/E) of 583.3, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Asia Sermkij Leasing has a current ratio of 1.78, which is within standard range for the sector. Debt can assist Asia Sermkij until it has trouble settling it off, either with new capital or with free cash flow. So, Asia Sermkij'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 Asia Sermkij Leasing sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Asia to invest in growth at high rates of return. When we think about Asia Sermkij's use of debt, we should always consider it together with cash and equity.Asia Sermkij 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 Asia Sermkij's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Asia Sermkij, which in turn will lower the firm's financial flexibility.Asia Sermkij Corporate Bonds Issued
Understaning Asia Sermkij Use of Financial Leverage
Leverage ratios show Asia Sermkij's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Asia Sermkij's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
Asia Sermkij Leasing Public Company Limited provides auto hire purchase services primarily in Thailand. The company was founded in 1984 and is based in Bangkok, Thailand. ASIA SERMKIJ operates under Credit Services classification in Thailand and is traded on Stock Exchange of Thailand. Please read more on our technical analysis page.
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Asia Sermkij financial ratios help investors to determine whether Asia 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 Asia with respect to the benefits of owning Asia Sermkij 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.