Donaldson Debt
| DCI Stock | USD 77.64 0.42 0.54% |
Donaldson holds a debt-to-equity ratio of 0.611. As of now, Donaldson's Short and Long Term Debt is decreasing as compared to previous years. The Donaldson's current Interest Debt Per Share is estimated to increase to 5.50, while Short and Long Term Debt Total is projected to decrease to under 286.9 M. With a high degree of financial leverage come high-interest payments, which usually reduce Donaldson's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Donaldson'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. Donaldson'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 Donaldson Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Donaldson's stakeholders.
For most companies, including Donaldson, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Donaldson, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Donaldson's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 6.2773 | Book Value 12.398 | Operating Margin 0.162 | Profit Margin 0.1154 | Return On Assets 0.1207 |
Donaldson |
Donaldson Bond Ratings
Donaldson financial ratings play a critical role in determining how much Donaldson have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Donaldson's borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (2.27) | Unlikely Manipulator | View |
Donaldson Debt to Cash Allocation
As Donaldson follows its natural business cycle, the capital allocation decisions will not magically go away. Donaldson's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Donaldson has 536.7 M in debt with debt to equity (D/E) ratio of 0.61, which is OK given its current industry classification. Donaldson has a current ratio of 2.19, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Donaldson to invest in growth at high rates of return. Donaldson Total Assets Over Time
Donaldson Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Donaldson 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.Donaldson Debt Ratio | 15.0 |
Donaldson Corporate Bonds Issued
Most Donaldson bonds can be classified according to their maturity, which is the date when Donaldson has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Donaldson Short Long Term Debt Total
Short Long Term Debt Total |
|
Understaning Donaldson Use of Financial Leverage
Understanding the composition and structure of Donaldson's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Donaldson's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 536.7 M | 286.9 M | |
| Net Debt | 304 M | 158.5 M | |
| Short Term Debt | 73.5 M | 69.8 M | |
| Long Term Debt | 483.4 M | 321.7 M | |
| Long Term Debt Total | 571.1 M | 451.5 M | |
| Short and Long Term Debt | 53.3 M | 79.5 M | |
| Net Debt To EBITDA | 0.46 | 0.38 | |
| Debt To Equity | 0.36 | 0.32 | |
| Interest Debt Per Share | 4.62 | 5.50 | |
| Debt To Assets | 0.18 | 0.15 | |
| Long Term Debt To Capitalization | 0.25 | 0.17 | |
| Total Debt To Capitalization | 0.26 | 0.22 | |
| Debt Equity Ratio | 0.36 | 0.32 | |
| Debt Ratio | 0.18 | 0.15 | |
| Cash Flow To Debt Ratio | 0.92 | 0.99 |
Currently Active Assets on Macroaxis
When determining whether Donaldson offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Donaldson's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Donaldson Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Donaldson Stock:Check out the analysis of Donaldson Fundamentals Over Time. For more detail on how to invest in Donaldson Stock please use our How to Invest in Donaldson guide.You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Is Industrial Machinery & Supplies & Components space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Donaldson. If investors know Donaldson will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Donaldson listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.216 | Dividend Share 1.04 | Earnings Share 3.38 | Revenue Per Share 29.713 | Quarterly Revenue Growth 0.064 |
The market value of Donaldson is measured differently than its book value, which is the value of Donaldson that is recorded on the company's balance sheet. Investors also form their own opinion of Donaldson's value that differs from its market value or its book value, called intrinsic value, which is Donaldson's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Donaldson's market value can be influenced by many factors that don't directly affect Donaldson's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Donaldson's value and its price as these two are different measures arrived at by different means. Investors typically determine if Donaldson is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Donaldson's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
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.