Gladstone Investment Corporate Bonds and Leverage Analysis
| GAIN Stock | USD 13.66 0.14 1.04% |
Gladstone Investment holds a debt-to-equity ratio of 0.586. At this time, Gladstone Investment's Net Debt is very stable compared to the past year. As of the 1st of December 2024, Short and Long Term Debt Total is likely to grow to about 418.3 M, while Long Term Debt is likely to drop about 184 M. With a high degree of financial leverage come high-interest payments, which usually reduce Gladstone Investment's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Gladstone Investment'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. Gladstone Investment'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 Gladstone Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Gladstone Investment's stakeholders.
For most companies, including Gladstone Investment, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Gladstone Investment, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Gladstone Investment'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 1.0934 | Book Value 12.494 | Operating Margin 0.6346 | Profit Margin 0.4167 | Return On Assets 0.0439 |
Gladstone |
Given the importance of Gladstone Investment's capital structure, the first step in the capital decision process is for the management of Gladstone Investment to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Gladstone Investment to issue bonds at a reasonable cost.
Gladstone Investment Bond Ratings
Gladstone Investment financial ratings play a critical role in determining how much Gladstone Investment 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 Gladstone Investment's borrowing costs.| Piotroski F Score | 4 | Poor | View |
| Beneish M Score | (2.71) | Unlikely Manipulator | View |
Gladstone Investment Debt to Cash Allocation
As Gladstone Investment follows its natural business cycle, the capital allocation decisions will not magically go away. Gladstone Investment'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.
Gladstone Investment currently holds 398.35 M in liabilities with Debt to Equity (D/E) ratio of 0.59, which is about average as compared to similar companies. Gladstone Investment has a current ratio of 1.47, which is within standard range for the sector. Note, when we think about Gladstone Investment's use of debt, we should always consider it together with its cash and equity.Gladstone Investment Total Assets Over Time
Gladstone Investment Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Gladstone Investment 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.Gladstone Investment Debt Ratio | 25.0 |
Gladstone Investment Corporate Bonds Issued
Gladstone Net Debt
Net Debt |
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Understaning Gladstone Investment Use of Financial Leverage
Leverage ratios show Gladstone Investment'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 Gladstone Investment'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 | ||
| Net Debt | 395.1 M | 414.9 M | |
| Short and Long Term Debt Total | 398.3 M | 418.3 M | |
| Long Term Debt | 336.5 M | 184 M | |
| Short Term Debt | 331.3 M | 347.9 M | |
| Short and Long Term Debt | 285.4 M | 195.1 M | |
| Long Term Debt Total | 336.5 M | 241.9 M | |
| Net Debt To EBITDA | 5.07 | 5.33 | |
| Debt To Equity | 0.81 | 0.41 | |
| Interest Debt Per Share | 12.26 | 12.87 | |
| Debt To Assets | 0.42 | 0.25 | |
| Long Term Debt To Capitalization | 0.45 | 0.33 | |
| Total Debt To Capitalization | 0.45 | 0.26 | |
| Debt Equity Ratio | 0.81 | 0.41 | |
| Debt Ratio | 0.42 | 0.25 | |
| Cash Flow To Debt Ratio | (0.18) | (0.17) |
Pair Trading with Gladstone Investment
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 Gladstone Investment 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 Gladstone Investment will appreciate offsetting losses from the drop in the long position's value.Moving together with Gladstone Stock
Moving against Gladstone Stock
| 0.86 | BRACU | Broad Capital Acquisition | PairCorr |
| 0.69 | RC | Ready Capital Corp | PairCorr |
| 0.52 | PFTAU | Portage Fintech Acqu | PairCorr |
| 0.4 | EMCGU | Embrace Change Acqui | PairCorr |
| 0.36 | TETEW | Technology Telecommunicatio | PairCorr |
The ability to find closely correlated positions to Gladstone Investment could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Gladstone Investment 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 Gladstone Investment - 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 Gladstone Investment to buy it.
The correlation of Gladstone Investment 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 Gladstone Investment moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Gladstone Investment 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 Gladstone Investment 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.Check out the analysis of Gladstone Investment Fundamentals Over Time. To learn how to invest in Gladstone Stock, please use our How to Invest in Gladstone Investment guide.You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Is Asset Management & Custody Banks 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 Gladstone Investment. If investors know Gladstone 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 Gladstone Investment 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 (0.70) | Dividend Share 0.96 | Earnings Share 1.04 | Revenue Per Share 2.544 | Quarterly Revenue Growth 0.113 |
The market value of Gladstone Investment is measured differently than its book value, which is the value of Gladstone that is recorded on the company's balance sheet. Investors also form their own opinion of Gladstone Investment's value that differs from its market value or its book value, called intrinsic value, which is Gladstone Investment'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 Gladstone Investment's market value can be influenced by many factors that don't directly affect Gladstone Investment'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 Gladstone Investment's value and its price as these two are different measures arrived at by different means. Investors typically determine if Gladstone Investment is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Gladstone Investment'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.