Gastar Exploration Corporate Bonds and Leverage Analysis
Gastar Exploration has over 362.75 Million in debt which may indicate that it relies heavily on debt financing. . Gastar Exploration's financial risk is the risk to Gastar Exploration stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Gastar Exploration'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. Gastar Exploration'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 Gastar Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Gastar Exploration's stakeholders.
For most companies, including Gastar Exploration, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Gastar Exploration, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Gastar Exploration's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Gastar |
Gastar Exploration Debt to Cash Allocation
Gastar Exploration has 362.75 M in debt with debt to equity (D/E) ratio of 9.94, demonstrating that the company may be unable to create cash to meet all of its financial commitments. Gastar Exploration has a current ratio of 1.06, demonstrating that it is not liquid enough and may have problems paying out its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Gastar to invest in growth at high rates of return.Gastar Exploration 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 Gastar Exploration's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Gastar Exploration, which in turn will lower the firm's financial flexibility.Gastar Exploration Corporate Bonds Issued
Thematic Opportunities
Explore Investment Opportunities
Check out Risk vs Return Analysis to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in state. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Consideration for investing in Gastar Stock
If you are still planning to invest in Gastar Exploration check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Gastar Exploration's history and understand the potential risks before investing.
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |
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.