Gladstone Investment Corporate Bonds and Leverage Analysis
| GAINL Stock | USD 25.95 0.05 0.19% |
Gladstone Investment holds a debt-to-equity ratio of 0.626. At this time, Gladstone Investment's Net Debt To EBITDA is quite stable compared to the past year. Interest Debt Per Share is expected to rise to 11.58 this year, although the value of Debt To Assets will most likely fall to 0.25. . Gladstone Investment's financial risk is the risk to Gladstone Investment stockholders that is caused by an increase in debt.
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.
Book Value 12.665 | Operating Margin | Profit Margin | Return On Assets | Return On Equity |
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 | 3 | Frail | View |
| Beneish M Score | (1.92) | Possible Manipulator | View |
Gladstone Investment Debt to Cash Allocation
Many companies such as Gladstone Investment, 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.
Gladstone Investment has accumulated 398.35 M in total debt with debt to equity ratio (D/E) of 0.63, which is about average as compared to similar companies. Gladstone Investment has a current ratio of 1.11, suggesting that it is not liquid enough and may have problems paying out its financial obligations in time and when they become due. 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 | 454.4 M | 477.1 M | |
| Short and Long Term Debt Total | 458.1 M | 481 M | |
| Short Term Debt | 381 M | 400.1 M | |
| Long Term Debt | 160.5 M | 166.2 M | |
| Long Term Debt Total | 160.5 M | 166.2 M | |
| Net Debt To EBITDA | 5.07 | 5.33 | |
| Debt To Equity | 0.73 | 0.41 | |
| Interest Debt Per Share | 11.03 | 11.58 | |
| Debt To Assets | 0.38 | 0.25 | |
| Long Term Debt To Capitalization | 0.40 | 0.33 | |
| Total Debt To Capitalization | 0.40 | 0.26 | |
| Debt Equity Ratio | 0.73 | 0.41 | |
| Debt Ratio | 0.38 | 0.25 | |
| Cash Flow To Debt Ratio | (0.16) | (0.15) |
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Is Specialized Finance 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 1.2 K | Dividend Share 1.59 | Earnings Share 2.697 | Revenue Per Share | Quarterly Revenue Growth 0.684 |
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.