Ultimus Managers Current Debt
| MDST Etf | 26.73 0.22 0.82% |
Ultimus Managers Trust holds a debt-to-equity ratio of 0.09. . Ultimus Managers' financial risk is the risk to Ultimus Managers stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Ultimus Managers' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Ultimus Managers' cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the ETF is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Ultimus Etf's retail investors understand whether an upcoming fall or rise in the market will negatively affect Ultimus Managers' stakeholders.
For most companies, including Ultimus Managers, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Ultimus Managers Trust, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Ultimus Managers' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Ultimus Managers' debt-to-equity ratio measures a ETF's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Ultimus Managers 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 Ultimus Managers to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Ultimus Managers is said to be less leveraged. If creditors hold a majority of Ultimus Managers' assets, the ETF is said to be highly leveraged.
Ultimus |
Ultimus Managers Trust Debt to Cash Allocation
Ultimus Managers Trust currently holds 49.4 M in liabilities with Debt to Equity (D/E) ratio of 0.09, which may suggest the company is not taking enough advantage from borrowing. Ultimus Managers Trust has a current ratio of 4.78, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Ultimus Managers until it has trouble settling it off, either with new capital or with free cash flow. So, Ultimus Managers' 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 Ultimus Managers Trust sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Ultimus to invest in growth at high rates of return. When we think about Ultimus Managers' use of debt, we should always consider it together with cash and equity.Ultimus Managers 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 Ultimus Managers' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Ultimus Managers, which in turn will lower the firm's financial flexibility.Understaning Ultimus Managers Use of Financial Leverage
Ultimus Managers' financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Ultimus Managers' current equity. If creditors own a majority of Ultimus Managers' assets, the company is considered highly leveraged. Understanding the composition and structure of Ultimus Managers' outstanding bonds gives an idea of how risky it is and if it is worth investing in.
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Check out the analysis of Ultimus Managers Fundamentals Over Time. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
The market value of Ultimus Managers Trust is measured differently than its book value, which is the value of Ultimus that is recorded on the company's balance sheet. Investors also form their own opinion of Ultimus Managers' value that differs from its market value or its book value, called intrinsic value, which is Ultimus Managers' 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 Ultimus Managers' market value can be influenced by many factors that don't directly affect Ultimus Managers' 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 Ultimus Managers' value and its price as these two are different measures arrived at by different means. Investors typically determine if Ultimus Managers is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Ultimus Managers' 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.