Algoma Steel Debt
ASTL Stock | 10.60 0.46 4.54% |
At this time, Algoma Steel's Long Term Debt is very stable compared to the past year. As of the 1st of March 2025, Net Debt To EBITDA is likely to grow to 0.19, while Short and Long Term Debt Total is likely to drop about 133.8 M. With a high degree of financial leverage come high-interest payments, which usually reduce Algoma Steel's Earnings Per Share (EPS).
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.0628 | Current Value 0.0596 | Quarterly Volatility 0.23401034 |
Algoma |
Algoma Steel Total Assets Over Time
Algoma Steel Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Algoma Steel uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Algoma Steel Debt Ratio | 5.96 |
Algoma Steel Corporate Bonds Issued
Algoma Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Algoma Steel Use of Financial Leverage
Leverage ratios show Algoma Steel'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 Algoma Steel'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).
Last Reported | Projected for Next Year | ||
Short and Long Term Debt Total | 140.8 M | 133.8 M | |
Net Debt | 49.2 M | 46.8 M | |
Short Term Debt | 14.8 M | 14.1 M | |
Long Term Debt | 114.7 M | 223.1 M | |
Long Term Debt Total | 473.1 M | 428.5 M | |
Short and Long Term Debt | 14.8 M | 14.1 M | |
Net Debt To EBITDA | 0.18 | 0.19 | |
Debt To Equity | 0.09 | 0.09 | |
Interest Debt Per Share | 1.44 | 1.37 | |
Debt To Assets | 0.06 | 0.06 | |
Long Term Debt To Capitalization | 0.07 | 0.07 | |
Total Debt To Capitalization | 0.10 | 0.10 | |
Debt Equity Ratio | 0.09 | 0.09 | |
Debt Ratio | 0.06 | 0.06 | |
Cash Flow To Debt Ratio | 1.82 | 1.90 |
Check out the analysis of Algoma Steel Fundamentals Over Time. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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.