Samudera Indonesia Debt
| SMDR Stock | IDR 282.00 2.00 0.70% |
Samudera Indonesia Tbk holds a debt-to-equity ratio of 0.813. . Samudera Indonesia's financial risk is the risk to Samudera Indonesia stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Samudera Indonesia'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. Samudera Indonesia'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 Samudera Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Samudera Indonesia's stakeholders.
For most companies, including Samudera Indonesia, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Samudera Indonesia Tbk, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Samudera Indonesia'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 Samudera Indonesia'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 Samudera Indonesia 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 Samudera Indonesia to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Samudera Indonesia is said to be less leveraged. If creditors hold a majority of Samudera Indonesia's assets, the Company is said to be highly leveraged.
Samudera |
Samudera Indonesia Tbk Debt to Cash Allocation
Samudera Indonesia Tbk has accumulated 144.76 M in total debt with debt to equity ratio (D/E) of 0.81, which is about average as compared to similar companies. Samudera Indonesia Tbk has a current ratio of 1.38, which is within standard range for the sector. Debt can assist Samudera Indonesia until it has trouble settling it off, either with new capital or with free cash flow. So, Samudera Indonesia'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 Samudera Indonesia Tbk sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Samudera to invest in growth at high rates of return. When we think about Samudera Indonesia's use of debt, we should always consider it together with cash and equity.Samudera Indonesia 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 Samudera Indonesia's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Samudera Indonesia, which in turn will lower the firm's financial flexibility.Samudera Indonesia Corporate Bonds Issued
Understaning Samudera Indonesia Use of Financial Leverage
Leverage ratios show Samudera Indonesia'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 Samudera Indonesia'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).
PT Samudera Indonesia Tbk, together with its subsidiaries, provides cargo transportation and integrated logistics services in Indonesia and rest of Southeast Asia, the Middle East, India, and internationally. PT Samudera Indonesia Tbk is a subsidiary of PT Samudera Indonesia Tangguh. Samudera Indonesia operates under Marine Shipping classification in Indonesia and is traded on Jakarta Stock Exchange. It employs 4000 people. Please read more on our technical analysis page.
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Samudera Indonesia financial ratios help investors to determine whether Samudera Stock 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 Samudera with respect to the benefits of owning Samudera Indonesia security.
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.