Korea Closed Debt
| KF Fund | USD 21.13 0.16 0.75% |
Korea Closed holds a debt-to-equity ratio of 2.5. . Korea Closed's financial risk is the risk to Korea Closed stockholders that is caused by an increase in debt.
Given that Korea Closed's debt-to-equity ratio measures a Fund's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Korea Closed 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 Korea Closed to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Korea Closed is said to be less leveraged. If creditors hold a majority of Korea Closed's assets, the Fund is said to be highly leveraged.
Korea |
Korea Closed Debt to Cash Allocation
Many companies such as Korea Closed, 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.
The company has a current ratio of 2.34, indicating that it is in good position to pay out its debt commitments in time. Debt can assist Korea Closed until it has trouble settling it off, either with new capital or with free cash flow. So, Korea Closed'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 Korea Closed sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Korea to invest in growth at high rates of return. When we think about Korea Closed's use of debt, we should always consider it together with cash and equity.
Korea Closed 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 Korea Closed's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Korea Closed, which in turn will lower the firm's financial flexibility.Korea Closed Corporate Bonds Issued
Most Korea bonds can be classified according to their maturity, which is the date when Korea Closed 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.
Understaning Korea Closed Use of Financial Leverage
Korea Closed's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Korea Closed's total debt position, including all outstanding debt obligations, and compares it with Korea Closed's equity. Financial leverage can amplify the potential profits to Korea Closed's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Korea Closed is unable to cover its debt costs.
The Korea Fund, Inc. is a closed-ended equity mutual fund launched and managed by Allianz Global Investors U.S. LLC. The fund invests in the public equity markets of Korea. It seeks to invest in stocks of companies operating across diversified sectors. The fund primarily invests in growth stocks of companies. It employs fundamental analysis with a bottom-up stock picking approach, focusing on such factors as price-to-earnings ratios, dividend yields, and earnings-per-share growth to create its portfolio. The fund benchmarks the performance of its portfolio against the MSCI Korea 2550 Index. It uses Grassroots Research to make its investments. The Korea Fund, Inc. was formed on August 29, 1984 and is domiciled in the United States. Please read more on our technical analysis page.
Currently Active Assets on Macroaxis
Other Information on Investing in Korea Fund
Korea Closed financial ratios help investors to determine whether Korea Fund 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 Korea with respect to the benefits of owning Korea Closed security.
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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.