Western Asset Debt
| MMU Fund | USD 10.34 0.09 0.88% |
Western Asset Managed holds a debt-to-equity ratio of 0.399. . Western Asset's financial risk is the risk to Western Asset stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Western Asset'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. Western Asset's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Fund is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Western Fund's retail investors understand whether an upcoming fall or rise in the market will negatively affect Western Asset's stakeholders.
For most companies, including Western Asset, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Western Asset Managed, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Western Asset'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 Western Asset'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 Western Asset 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 Western Asset to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Western Asset is said to be less leveraged. If creditors hold a majority of Western Asset's assets, the Fund is said to be highly leveraged.
Western |
Western Asset Managed Debt to Cash Allocation
Western Asset Managed has 222.68 M in debt with debt to equity (D/E) ratio of 0.4, which is OK given its current industry classification. Western Asset Managed has a current ratio of 1.16, demonstrating that it may not be capable to disburse its financial commitments when the payables are due. Debt can assist Western Asset until it has trouble settling it off, either with new capital or with free cash flow. So, Western Asset'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 Western Asset Managed sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Western to invest in growth at high rates of return. When we think about Western Asset's use of debt, we should always consider it together with cash and equity.
Western Asset 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 Western Asset's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Western Asset, which in turn will lower the firm's financial flexibility.Western Asset Corporate Bonds Issued
Understaning Western Asset Use of Financial Leverage
Western Asset's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Western Asset's current equity. If creditors own a majority of Western Asset's assets, the company is considered highly leveraged. Understanding the composition and structure of Western Asset's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Western Asset Managed Municipals Fund Inc. is a closed ended fixed income mutual fund launched and managed by Legg Mason Partners Fund Advisor, LLC. The fund is co-managed by Western Asset Management Company. It invests in the fixed income markets of the United States. The fund invests in securities that provide income exempt from federal income tax. It invests primarily in investment grade municipal securities. The fund employs intensive proprietary research to create its portfolio. It benchmarks the performance of its portfolio against the Barclays Capital Municipal Bond Index. The fund was formerly known as Managed Municipals Portfolio Inc. Western Asset Managed Municipals Fund Inc. was formed on June 26, 1992 and is domiciled in the United States. Please read more on our technical analysis page.
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Other Information on Investing in Western Fund
Western Asset financial ratios help investors to determine whether Western 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 Western with respect to the benefits of owning Western Asset 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.