Harum Energy Debt
| HRUM Stock | IDR 1,080 30.00 2.70% |
Harum Energy Tbk holds a debt-to-equity ratio of 0.063. . Harum Energy's financial risk is the risk to Harum Energy stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Harum Energy'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. Harum Energy'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 Harum Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Harum Energy's stakeholders.
For most companies, including Harum Energy, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Harum Energy Tbk, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Harum Energy's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Harum Energy's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Harum Energy is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Harum Energy to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Harum Energy is said to be less leveraged. If creditors hold a majority of Harum Energy's assets, the Company is said to be highly leveraged.
Harum |
Harum Energy Tbk Debt to Cash Allocation
Harum Energy Tbk has accumulated 82.61 M in total debt with debt to equity ratio (D/E) of 0.06, which may suggest the company is not taking enough advantage from borrowing. Harum Energy Tbk has a current ratio of 2.22, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Harum Energy until it has trouble settling it off, either with new capital or with free cash flow. So, Harum Energy's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Harum Energy Tbk sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Harum to invest in growth at high rates of return. When we think about Harum Energy's use of debt, we should always consider it together with cash and equity.Harum Energy 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 Harum Energy's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Harum Energy, which in turn will lower the firm's financial flexibility.Harum Energy Corporate Bonds Issued
Understaning Harum Energy Use of Financial Leverage
Leverage ratios show Harum Energy'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 Harum Energy'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).
PT Harum Energy Tbk, together with its subsidiaries, engages in coal mining and logistics activities in Indonesia. PT Harum Energy Tbk operates as a subsidiary of PT Karunia Bara Perkasa. Harum Energy operates under Thermal Coal classification in Indonesia and is traded on Jakarta Stock Exchange. It employs 732 people. Please read more on our technical analysis page.
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Harum Energy financial ratios help investors to determine whether Harum Stock is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Harum with respect to the benefits of owning Harum Energy security.
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.