Moodys Debt

MCO Stock  USD 498.20  4.51  0.91%   
Moodys has over 7.42 Billion in debt which may indicate that it relies heavily on debt financing. At this time, Moodys' Interest Debt Per Share is very stable compared to the past year. As of the 5th of December 2024, Long Term Debt To Capitalization is likely to grow to 0.71, while Short Term Debt is likely to drop about 102.6 M. With a high degree of financial leverage come high-interest payments, which usually reduce Moodys' Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

Moodys' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Moodys' 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 Moodys Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Moodys' stakeholders.
For most companies, including Moodys, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Moodys, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Moodys' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
22.9121
Book Value
21.547
Operating Margin
0.4203
Profit Margin
0.2905
Return On Assets
0.121
At this time, Moodys' Liabilities And Stockholders Equity is very stable compared to the past year. As of the 5th of December 2024, Non Current Liabilities Total is likely to grow to about 9.1 B, while Total Current Liabilities is likely to drop about 1.5 B.
  
Check out the analysis of Moodys Fundamentals Over Time.
To learn how to invest in Moodys Stock, please use our How to Invest in Moodys guide.

Moodys Bond Ratings

Moodys financial ratings play a critical role in determining how much Moodys 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 Moodys' borrowing costs.
Piotroski F Score
3
FrailView
Beneish M Score
(2.26)
Unlikely ManipulatorView

Moodys Debt to Cash Allocation

As Moodys follows its natural business cycle, the capital allocation decisions will not magically go away. Moodys' decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Moodys has 7.42 B in debt with debt to equity (D/E) ratio of 3.38, meaning that the company heavily relies on borrowing funds for operations. Moodys has a current ratio of 1.76, which is typical for the industry and considered as normal. Note however, debt could still be an excellent tool for Moodys to invest in growth at high rates of return.

Moodys Total Assets Over Time

Moodys Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Moodys 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.

Moodys Debt Ratio

    
  39.0   
It appears that about 61% of Moodys' assets are financed through equity. 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 Moodys' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Moodys, which in turn will lower the firm's financial flexibility.

Moodys Corporate Bonds Issued

Moodys issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Moodys uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt.

Moodys Short Long Term Debt Total

Short Long Term Debt Total

7.79 Billion

At this time, Moodys' Short and Long Term Debt Total is very stable compared to the past year.

Understaning Moodys Use of Financial Leverage

Leverage ratios show Moodys' 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 Moodys' 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 ReportedProjected for Next Year
Short and Long Term Debt Total7.4 B7.8 B
Net Debt5.3 B5.5 B
Short Term Debt108 M102.6 M
Long Term Debt8.5 B8.9 B
Long Term Debt Total8.5 B8.9 B
Short and Long Term Debt404.9 M384.7 M
Net Debt To EBITDA 2.03  2.13 
Debt To Equity 2.14  2.25 
Interest Debt Per Share 39.93  41.93 
Debt To Assets 0.49  0.39 
Long Term Debt To Capitalization 0.68  0.71 
Total Debt To Capitalization 0.68  0.72 
Debt Equity Ratio 2.14  2.25 
Debt Ratio 0.49  0.39 
Cash Flow To Debt Ratio 0.30  0.29 
Please read more on our technical analysis page.

Pair Trading with Moodys

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Moodys position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Moodys will appreciate offsetting losses from the drop in the long position's value.

Moving against Moodys Stock

  0.68QMCI QuotemediaPairCorr
The ability to find closely correlated positions to Moodys could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Moodys when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Moodys - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Moodys to buy it.
The correlation of Moodys is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Moodys moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Moodys moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Moodys can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
When determining whether Moodys offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Moodys' financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Moodys Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Moodys Stock:
Check out the analysis of Moodys Fundamentals Over Time.
To learn how to invest in Moodys Stock, please use our How to Invest in Moodys guide.
You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Is Financial Exchanges & Data 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 Moodys. If investors know Moodys 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 Moodys 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
0.389
Dividend Share
3.32
Earnings Share
11.06
Revenue Per Share
37.828
Quarterly Revenue Growth
0.232
The market value of Moodys is measured differently than its book value, which is the value of Moodys that is recorded on the company's balance sheet. Investors also form their own opinion of Moodys' value that differs from its market value or its book value, called intrinsic value, which is Moodys' 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 Moodys' market value can be influenced by many factors that don't directly affect Moodys' 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 Moodys' value and its price as these two are different measures arrived at by different means. Investors typically determine if Moodys is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Moodys' 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.
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.