Lument Finance Debt

LFT Stock  USD 2.75  0.04  1.48%   
Lument Finance Trust has over 1.19 Billion in debt which may indicate that it relies heavily on debt financing. At this time, Lument Finance's Long Term Debt is comparatively stable compared to the past year. Debt To Equity is likely to gain to 6.81 in 2025, whereas Short Term Debt is likely to drop slightly above 802.4 M in 2025. . Lument Finance's financial risk is the risk to Lument Finance stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Lument Finance'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. Lument Finance'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 Lument Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Lument Finance's stakeholders.
For most companies, including Lument Finance, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Lument Finance Trust, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Lument Finance'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
0.7628
Book Value
3.553
Operating Margin
0.6811
Profit Margin
0.6284
Return On Assets
0.017
At this time, Lument Finance's Total Current Liabilities is comparatively stable compared to the past year. Change To Liabilities is likely to gain to about 2.3 M in 2025, whereas Liabilities And Stockholders Equity is likely to drop slightly above 1.1 B in 2025.
  
Check out the analysis of Lument Finance Fundamentals Over Time.

Lument Finance Bond Ratings

Lument Finance Trust financial ratings play a critical role in determining how much Lument Finance 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 Lument Finance's borrowing costs.
Piotroski F Score
4
PoorView
Beneish M Score
(2.50)
Unlikely ManipulatorView

Lument Finance Trust Debt to Cash Allocation

Lument Finance Trust has 1.19 B in debt with debt to equity (D/E) ratio of 3.53, meaning that the company heavily relies on borrowing funds for operations. Lument Finance Trust has a current ratio of 150.64, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Lument to invest in growth at high rates of return.

Lument Finance Total Assets Over Time

Lument Finance Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Lument Finance 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.

Lument Finance Debt Ratio

    
  59.0   
It appears slightly above 41% of Lument Finance's assets are financed be 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 Lument Finance's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Lument Finance, which in turn will lower the firm's financial flexibility.

Lument Finance Corporate Bonds Issued

Lument Net Debt

Net Debt

739.37 Million

At this time, Lument Finance's Net Debt is comparatively stable compared to the past year.

Understaning Lument Finance Use of Financial Leverage

Lument Finance's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Lument Finance's current equity. If creditors own a majority of Lument Finance's assets, the company is considered highly leveraged. Understanding the composition and structure of Lument Finance's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Last ReportedProjected for Next Year
Net DebtB739.4 M
Short and Long Term Debt Total1.1 BB
Short Term Debt1.4 B802.4 M
Long Term Debt1.1 B1.1 B
Long Term Debt Total42.3 M40.2 M
Net Debt To EBITDA 10.88  10.33 
Debt To Equity 5.70  6.81 
Interest Debt Per Share 27.92  26.53 
Debt To Assets 0.74  0.59 
Long Term Debt To Capitalization 0.96  0.94 
Total Debt To Capitalization 0.96  0.92 
Debt Equity Ratio 5.70  6.81 
Debt Ratio 0.74  0.59 
Cash Flow To Debt Ratio 0.02  0.01 
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Additional Tools for Lument Stock Analysis

When running Lument Finance's price analysis, check to measure Lument Finance's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Lument Finance is operating at the current time. Most of Lument Finance's value examination focuses on studying past and present price action to predict the probability of Lument Finance's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Lument Finance's price. Additionally, you may evaluate how the addition of Lument Finance to your portfolios can decrease your overall portfolio volatility.

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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.