NexGen Energy Corporate Bonds and Leverage Analysis
| NXE Stock | CAD 7.63 0.08 1.06% |
NexGen Energy holds a debt-to-equity ratio of 0.867. At this time, NexGen Energy's Debt Ratio is very stable compared to the past year. With a high degree of financial leverage come high-interest payments, which usually reduce NexGen Energy's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
NexGen Energy'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. NexGen Energy'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 NexGen Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect NexGen Energy's stakeholders.
For most companies, including NexGen Energy, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for NexGen Energy, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, NexGen Energy's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
At this time, NexGen Energy's Total Current Liabilities is very stable compared to the past year. As of the 1st of March 2025, Liabilities And Stockholders Equity is likely to grow to about 1.2 B, while Non Current Liabilities Total is likely to drop about 105.5 M. NexGen |
Given the importance of NexGen Energy's capital structure, the first step in the capital decision process is for the management of NexGen Energy to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of NexGen Energy to issue bonds at a reasonable cost.
NexGen Energy Debt to Cash Allocation
NexGen Energy has accumulated 160.42 M in total debt with debt to equity ratio (D/E) of 0.87, which is about average as compared to similar companies. NexGen Energy has a current ratio of 20.91, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist NexGen Energy until it has trouble settling it off, either with new capital or with free cash flow. So, NexGen Energy'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 NexGen Energy sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for NexGen to invest in growth at high rates of return. When we think about NexGen Energy's use of debt, we should always consider it together with cash and equity.NexGen Energy Total Assets Over Time
NexGen Energy Assets Financed by Debt
The debt-to-assets ratio shows the degree to which NexGen Energy 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.NexGen Energy Debt Ratio | 23.0 |
NexGen Energy Corporate Bonds Issued
NexGen Net Debt
Understaning NexGen Energy Use of Financial Leverage
Leverage ratios show NexGen Energy's 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 NexGen Energy's 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 Reported | Projected for Next Year | ||
| Net Debt | -117.3 M | -111.4 M | |
| Short and Long Term Debt Total | 184.5 M | 140 M | |
| Long Term Debt | 182.2 M | 126.9 M | |
| Short and Long Term Debt | 197.1 M | 206.9 M | |
| Short Term Debt | 833.4 K | 791.7 K | |
| Long Term Debt Total | 73.5 M | 101.5 M | |
| Net Debt To EBITDA | 1.79 | 1.88 | |
| Debt To Equity | 0.18 | 0.17 | |
| Interest Debt Per Share | 0.30 | 0.22 | |
| Debt To Assets | 0.14 | 0.23 | |
| Long Term Debt To Capitalization | 0.15 | 0.24 | |
| Total Debt To Capitalization | 0.15 | 0.25 | |
| Debt Equity Ratio | 0.18 | 0.17 | |
| Debt Ratio | 0.14 | 0.23 | |
| Cash Flow To Debt Ratio | (0.30) | (0.31) |
Check out the analysis of NexGen Energy Fundamentals Over Time. To learn how to invest in NexGen Stock, please use our How to Invest in NexGen Energy guide.You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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.