Primavera Capital Debt
Primavera Capital holds a debt-to-equity ratio of 0.001. . Primavera Capital's financial risk is the risk to Primavera Capital stockholders that is caused by an increase in debt.
Given that Primavera Capital's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Primavera Capital 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 Primavera Capital to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Primavera Capital is said to be less leveraged. If creditors hold a majority of Primavera Capital's assets, the Company is said to be highly leveraged.
Primavera |
Primavera Capital Debt to Cash Allocation
Many companies such as Primavera Capital, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company has a current ratio of 0.08, implying that it has not enough working capital to pay out debt commitments in time. Note however, debt could still be an excellent tool for Primavera to invest in growth at high rates of return. Primavera Capital 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 Primavera Capital's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Primavera Capital, which in turn will lower the firm's financial flexibility.Primavera Capital Corporate Bonds Issued
Understaning Primavera Capital Use of Financial Leverage
Understanding the structure of Primavera Capital's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Primavera Capital's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Primavera Capital Acquisition Corporation does not have significant operations. The company was incorporated in 2020 and is based in Central, Hong Kong. Primavera Capital is traded on New York Stock Exchange in the United States. Please read more on our technical analysis page.
Thematic Opportunities
Explore Investment Opportunities
Check out Your Equity Center to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in real. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Consideration for investing in Primavera Stock
If you are still planning to invest in Primavera Capital check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Primavera Capital's history and understand the potential risks before investing.
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |
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.