Debt Cash – CTXETG http://ctxetg.com/ Tue, 20 Jul 2021 17:52:29 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 http://ctxetg.com/wp-content/uploads/2021/06/icon-150x150.png Debt Cash – CTXETG http://ctxetg.com/ 32 32 Understanding a Balance Sheet: Assets, Liabilities and Equity | Invest 101 http://ctxetg.com/understanding-a-balance-sheet-assets-liabilities-and-equity-invest-101/ http://ctxetg.com/understanding-a-balance-sheet-assets-liabilities-and-equity-invest-101/#respond Tue, 20 Jul 2021 15:25:00 +0000 http://ctxetg.com/understanding-a-balance-sheet-assets-liabilities-and-equity-invest-101/ If you’re interested in investing, you’ve probably read quite a few articles that say “do your homework” before buying a stock. Reading and understanding a balance sheet is one of these duties. Together with the income statement and the cash flow statement, the balance sheet gives investors a sense of the value of a business, […]]]>

If you’re interested in investing, you’ve probably read quite a few articles that say “do your homework” before buying a stock.

Reading and understanding a balance sheet is one of these duties. Together with the income statement and the cash flow statement, the balance sheet gives investors a sense of the value of a business, says Robert Johnson, professor of finance at Creighton University.

“Investors with a trained eye and attention to detail can take a quick glance at a balance sheet and identify a company’s financial strengths and weaknesses,” he says.

To understand the fundamentals of a balance sheet, as well as the financial position that a balance sheet can convey, investors should ask themselves the following questions:

  • What is a balance sheet?
  • What’s in a balance sheet?
  • What is a balance sheet for?

What is a balance sheet?

Investment experts see the balance sheet as a snapshot of the health of a business at any given time. It is a summary of what a company owns in assets, owes in liabilities and the difference between the two, which is shareholders’ equity.

The balance sheet is so named because all assets must equal or balance with liabilities and equity.

In-house accounting departments usually prepare the balance sheets of large companies, which are then audited by an independent accounting firm. Small businesses may have an external accountant to help them prepare the balance sheet, or the task may fall to an in-house accountant.

What’s in a balance sheet?

While you can explore the accounting definitions as far as you want – it’s a must, after all – here’s a look at what you’ll find on a balance sheet:

Assets: Assets include cash, investments, accounts receivable, inventory, land and buildings which are aggregated from most liquid to least liquid. So the money would come first and the buildings would come last on this list. Intangible assets lack physical substance. The total amount of assets owned by a business is called total assets.

Liabilities: Liabilities, such as accounts payable, short-term and long-term debt, capital leases, and pensions or other retirement benefits, are listed in order of due date, earliest to latest . Long-term debts are due at any time after one year in the future. The total liabilities of a business are all debts and obligations owed to other parties.

Equity: This is probably where you come in as an investor. Common or preferred stocks are types of equity. You might hear the term “book value” instead of shareholders’ equity, but you will learn more about book value.

What is a balance sheet for?

A balance sheet is often used in conjunction with other documents, such as an income statement, which shows profit or loss, and a cash flow statement that lists how a business has spent and received money. Together, these documents can help you decide whether or not to buy a stock.

“Balance sheets can help investors understand businesses by providing them with some of the basics needed to look at key financial ratios that they can use to assess the overall health of a company and to compare one company to another in the market. same sector, ”says Cassandra Kirby, Private Wealth Advisor at Braun-Bostich & Associates.

Ratios to watch include a company’s debt-to-equity ratio, which can tell you if a company has over-leveraged itself.

“The more debt a company has (…) the more investors worry about the likelihood of a company defaulting,” said Mayra Rodriguez Valladares, senior manager at MRV Associates.

Another key ratio is a measure known as the current ratio, which divides current assets by current liabilities.

“Businesses with current assets only barely greater than current liabilities typically need to finance their working capital through a line of credit or other debt financing, which puts a strain on the company’s cash flow and can lead to problems such as an inability to buy products or pay. for top talent and in some cases can lead to bankruptcy, ”says Sam Brownell, founder of Stratus Wealth Advisors.

Financial ratios can track progress over a period of time and can be used to compare a company’s balance sheet with industry benchmarks, says Jessica Distel, director of tax and business services at Buckingham Advisors.

Examining a balance sheet can also help investors find good deals.

“Book value is roughly designed to give investors an idea of ​​what a company would be worth if all of its assets were (…) sold,” Johnson explains. “Some investors look for undervalued companies by looking for where stock prices are below a company’s book value.”

The bottom line

Investors using broad-based index funds probably don’t need to be obsessed with monitoring company balance sheets because their holdings are going to be very diverse, Brownell says.

If you’re buying funds with concentrated positions or individual stocks, you’ll definitely want to know how to analyze a balance sheet, he says.

“Everyday retail investors probably don’t need to be too wrapped up in balance sheet analysis,” Kirby said. “However, having a general understanding of the variables that go into a balance sheet and how to analyze certain key financial ratios can help a retail investor better understand a potential investment and be able to calculate some of these ratios and compare them to a potential investment. possible alternative. “


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We believe that Legrand (EPA: LR) can control its debt http://ctxetg.com/we-believe-that-legrand-epa-lr-can-control-its-debt/ http://ctxetg.com/we-believe-that-legrand-epa-lr-can-control-its-debt/#respond Tue, 20 Jul 2021 05:04:10 +0000 http://ctxetg.com/we-believe-that-legrand-epa-lr-can-control-its-debt/ Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from risk.” When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. Mostly, Legrand SA […]]]>

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from risk.” When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. Mostly, Legrand SA (EPA: LR) carries the debt. But does this debt concern shareholders?

Why Does Debt Bring Risk?

Debts and other liabilities become risky for a business when it cannot easily meet these obligations, either with free cash flow or by raising capital at an attractive price. If things really go wrong, lenders can take over the business. However, a more common (but still costly) event is when a company has to issue stock at bargain prices, constantly diluting shareholders, just to strengthen its balance sheet. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. When we think of a business’s use of debt, we first look at cash flow and debt together.

See our latest analysis for Legrand

How many debts does Legrand carry?

You can click on the graph below for historical figures, but it shows that in March 2021, Legrand had 4.87 billion euros in debt, an increase from 4.36 billion euros, on a year. However, he has € 2.76 billion in cash to make up for this, leading to net debt of around € 2.11 billion.

ENXTPA: LR History of debt to equity July 20, 2021

Is Legrand’s balance sheet healthy?

Zooming in on the latest balance sheet data, we see that Legrand had liabilities of € 2.66 billion at 12 months and liabilities of € 5.27 billion due beyond. In compensation for these obligations, he had cash of € 2.76 billion as well as receivables valued at € 862.9 million within 12 months. Its liabilities thus exceed the sum of its cash and its (short-term) receivables by 4.31 billion euros.

Given that listed Legrand shares are worth a very impressive total of 24.0 billion euros, it seems unlikely that this level of liabilities is a major threat. But there are enough liabilities that we would certainly recommend that shareholders continue to monitor the balance sheet going forward.

We measure a company’s debt load relative to its earning capacity by looking at its net debt divided by its earnings before interest, taxes, depreciation, and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT) covers its interest costs (interest coverage). Thus, we consider debt versus earnings with and without amortization charges.

Legrand’s net debt to EBITDA ratio of around 1.5 suggests only a moderate recourse to debt. And its strong coverage interest of 12.4 times, makes us even more comfortable. On the other hand, Legrand has seen its EBIT fall by 5.4% over the last twelve months. This kind of decline, if it continues, will obviously make the debt more difficult to manage. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether Legrand will be able to strengthen its balance sheet over time. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

But our last consideration is also important, because a business cannot pay its debts with paper profits; he needs hard cash. It is therefore worth checking to what extent this EBIT is supported by free cash flow. Over the past three years, Legrand has generated free cash flow amounting to a very solid 84% of its EBIT, more than expected. This puts him in a very strong position to pay off the debt.

Our point of view

Fortunately, Legrand’s impressive interest coverage means it has the upper hand over its debt. But frankly, we think its EBIT growth rate undermines that impression a bit. When you consider the range of factors above, it seems Legrand is being fairly reasonable with its use of debt. While this carries some risk, it can also improve returns for shareholders. When analyzing debt levels, the balance sheet is the obvious starting point. However, not all investment risks lie on the balance sheet – far from it. To do this, you need to know the 1 warning sign we spotted with Legrand.

If you are interested in investing in companies that can generate profits without the burden of debt, check out this page. free list of growing companies that have net cash on the balance sheet.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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A look at Seagate Technology’s debt http://ctxetg.com/a-look-at-seagate-technologys-debt/ http://ctxetg.com/a-look-at-seagate-technologys-debt/#respond Mon, 19 Jul 2021 09:51:55 +0000 http://ctxetg.com/a-look-at-seagate-technologys-debt/ Over the past three months, the actions of Seagate technology (NASDAQ: STX) fell by nan%. Before we understand the importance of debt, let’s take a look at Seagate Technology’s debt amount. Seagate Technology’s debt According to Seagate Technology’s latest financial statement released on April 29, 2021, total debt stands at $ 5.14 billion, of which […]]]>

Over the past three months, the actions of Seagate technology (NASDAQ: STX) fell by nan%. Before we understand the importance of debt, let’s take a look at Seagate Technology’s debt amount.

Seagate Technology’s debt

According to Seagate Technology’s latest financial statement released on April 29, 2021, total debt stands at $ 5.14 billion, of which $ 4.90 billion is long-term debt and $ 245.00 million is current debt. . Adjusted for $ 1.21 billion in cash equivalents, the company has net debt of $ 3.93 billion.

Let’s define some of the terms we used in the paragraph above. Short-term debt is the portion of a company’s debt that matures within one year, while long-term debt is the portion over one year. Cash equivalents include cash and all liquid securities with maturity periods of 90 days or less. Total debt equals current debt plus long-term debt minus cash equivalents.

Investors look at the debt ratio to understand a company’s financial leverage. Seagate Technology has $ 8.60 billion in total assets, making the debt ratio 0.6. Generally speaking, a debt ratio greater than one means that a large part of the debt is financed by assets. As the debt ratio rises, the risk of default increases if interest rates rise. Different industries have different tolerance thresholds for debt ratios. A debt ratio of 25% may be higher for one industry and average for another.

Why are investors interested in debt?

Debt is an important factor in a company’s capital structure and can help it achieve growth. Debt generally has a relatively lower cost of financing than equity, making it an attractive option for executives.

However, due to interest payment obligations, a company’s cash flow can be affected. Having financial leverage also allows companies to use additional capital for their business operations, allowing stock owners to keep excess profits generated by debt capital.

Are you looking for stocks with a low debt ratio? Check out Benzinga Pro, a market research platform that gives investors near instant access to dozens of stock market metrics, including the debt ratio. Click here to find out more.


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Is Comfort Systems USA (NYSE: FIX) Using Too Much Debt? http://ctxetg.com/is-comfort-systems-usa-nyse-fix-using-too-much-debt/ http://ctxetg.com/is-comfort-systems-usa-nyse-fix-using-too-much-debt/#respond Sun, 18 Jul 2021 13:23:38 +0000 http://ctxetg.com/is-comfort-systems-usa-nyse-fix-using-too-much-debt/ Warren Buffett said: “Volatility is far from synonymous with risk”. So it seems like smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess the level of risk of a business. Like many other companies Comfort Systems USA, Inc. (NYSE: FIX) uses debt. But […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk”. So it seems like smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess the level of risk of a business. Like many other companies Comfort Systems USA, Inc. (NYSE: FIX) uses debt. But does this debt worry shareholders?

What risk does debt entail?

Debt helps a business until the business struggles to repay it, either with new capital or with free cash flow. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that he must raise new equity at low cost, thereby diluting shareholders over the long term. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. When we think of a business’s use of debt, we first look at cash flow and debt together.

See our latest review for Comfort Systems USA

How much debt does Comfort Systems USA have?

The image below, which you can click for more details, shows that Comfort Systems USA had a debt of $ 171.8 million at the end of March 2021, a reduction from $ 334.0 million. US dollars over one year. However, he also had $ 52.1 million in cash, so his net debt is $ 119.6 million.

NYSE: FIX Historical Debt to Equity July 18, 2021

A look at the responsibilities of Comfort Systems USA

We can see from the most recent balance sheet that Comfort Systems USA had liabilities of US $ 691.7 million maturing within one year and liabilities of US $ 300.7 million maturing within one year. of the. On the other hand, it had US $ 52.1 million in cash and US $ 681.0 million in receivables due within one year. Its liabilities therefore total US $ 259.3 million more than the combination of its cash and short-term receivables.

Given that the publicly traded shares of Comfort Systems USA are worth a total of US $ 2.66 billion, it seems unlikely that this level of liabilities is a major threat. However, we think it’s worth keeping an eye on the strength of its balance sheet as it can change over time.

In order to measure a company’s debt relative to its profits, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its profit before interest and taxes (EBIT) divided by its interest. debtors (its interest coverage). The advantage of this approach is that we take into account both the absolute amount of debt (with net debt versus EBITDA) and the actual interest charges associated with this debt (with its coverage rate). interests).

Comfort Systems USA’s net debt is only 0.45 times its EBITDA. And its EBIT easily covers its interest costs, being 27.7 times higher. So we’re pretty relaxed about its ultra-conservative use of debt. On top of that, we are happy to report that Comfort Systems USA has increased its EBIT by 30%, reducing the specter of future debt repayments. The balance sheet is clearly the area you need to focus on when analyzing debt. But it is future profits, more than anything, that will determine Comfort Systems USA’s ability to maintain a healthy balance sheet in the future. So, if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

Finally, a business can only pay off its debts with hard cash, not with book profits. It is therefore worth checking to what extent this EBIT is supported by free cash flow. Over the past three years, Comfort Systems USA has actually generated more free cash flow than EBIT. This kind of strong cash generation warms our hearts like a puppy in a bumblebee costume.

Our point of view

Comfort Systems USA’s interest coverage suggests he can manage his debt as easily as Cristiano Ronaldo could score a goal against an Under-14 goalkeeper. And the good news does not end there, since its conversion of EBIT into free cash flow also confirms this impression! It seems Comfort Systems USA has no trouble standing on its own and has no reason to fear its lenders. In our opinion, he has a healthy and happy track record. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks lie on the balance sheet – far from it. Note that Comfort Systems USA shows 2 warning signs in our investment analysis , and 1 of them is significant …

If, after all of this, you’re more interested in a fast-growing company with a strong balance sheet, take a quick look at our list of cash net growth stocks.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020

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Are summer spending increasing? 3 ways to get extra cash http://ctxetg.com/are-summer-spending-increasing-3-ways-to-get-extra-cash/ http://ctxetg.com/are-summer-spending-increasing-3-ways-to-get-extra-cash/#respond Sat, 17 Jul 2021 17:32:21 +0000 http://ctxetg.com/are-summer-spending-increasing-3-ways-to-get-extra-cash/ If your credit card bills keep rising and you’re spending more money than you’ve had in a long time, you’re in good company. Inflation makes everything from gasoline to groceries cost much more, and straining a lot of people’s budgets. Meanwhile, you could be spending more money this summer in general. The weather is hot, […]]]>

If your credit card bills keep rising and you’re spending more money than you’ve had in a long time, you’re in good company. Inflation makes everything from gasoline to groceries cost much more, and straining a lot of people’s budgets.

Meanwhile, you could be spending more money this summer in general. The weather is hot, the pandemic situation doesn’t seem so dire, and maybe you are ready to socialize after spending the past 16 months locked up at home. Or, you may be traveling for the first time since the start of the pandemic.

Either way, the last thing you want to do this summer is end it with a bunch of debt in your name. If your expenses keep climbing, here are some steps you can take to earn extra cash.

1. Get a secondary job

No one wants to spend all summer working, and if you are already working full time, a sideline can seem difficult. But remember, any second job you get can be as flexible as you need it to be.

Don’t want to commit to a predefined evening schedule? You do not have to. You can sign up to drive for a ridesharing company and transport passengers around town at your convenience. Likewise, you can find other gigs that can be done remotely and at your own pace, like content writing, website design, or even data entry. It’s worth exploring your options, as earning a little more money on the side could make it easier for you to enjoy the summer rather than stressing out.

2. Sell things you don’t need

We all have things that take up space in our closets. Rather than letting these things continue to accumulate dust, try unloading them to the highest bidder.

Host a garage sale with friends where you sell your unwanted goods or list more expensive items, like electronics, online to reach more buyers. You can use sites like eBay for this, but with eBay you will pay a fee if your items sell. So you might be better off advertising the products you have for sale on social media, where you won’t be charged.

3. Use the right credit cards

The great thing about credit cards is that they reward you for the purchases you already make. If you upgrade your favorite credit card to a new one that offers more generous cash back on things like gas, groceries, restaurants, and travel, you may be able to withdraw enough money to cover your growing costs.

Some people are spending more money this summer because they go out more. For others, their bills are going up not because they changed their ways, but because the essentials of everyday life have simply started to cost more. Whichever camp you end up in, do your best to earn some extra cash to avoid going into debt. So you can end summer 2021 on a high note.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. Editorial content for The Ascent is separate from editorial content for The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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What are invitations and how do they work? – Forbes Advisor INDIA http://ctxetg.com/what-are-invitations-and-how-do-they-work-forbes-advisor-india/ http://ctxetg.com/what-are-invitations-and-how-do-they-work-forbes-advisor-india/#respond Fri, 16 Jul 2021 16:18:14 +0000 http://ctxetg.com/what-are-invitations-and-how-do-they-work-forbes-advisor-india/ Simply put, an infrastructure investment trust is a common investment vehicle like a mutual fund. While mutual funds invest the amount received in financial securities, an InvIT invests the same in real infrastructure assets such as roads, power plants, transmission lines, pipelines, etc. Here’s what you need to know about InvITs and how they work. […]]]>

Simply put, an infrastructure investment trust is a common investment vehicle like a mutual fund. While mutual funds invest the amount received in financial securities, an InvIT invests the same in real infrastructure assets such as roads, power plants, transmission lines, pipelines, etc.

Here’s what you need to know about InvITs and how they work.

How InvITs Work

InvIT is a commercial trust (like REIT), registered with the market regulator, which owns, operates and manages operational infrastructure assets. These long-term income-generating infrastructures in turn generate cash flows, which are then distributed periodically to unitholders.

InvITs are a hybrid of equity and debt investing, that is, they exhibit both equity and debt characteristics. While the operating business model helps provide stable, predictable, and relatively risk-free cash flow like debt, there is potential for growth like equity because returns are not set with scope for change. of the unit price.

  • InvITs are designed to mitigate the risks of under-construction in the infrastructure sector, as at least 80% of the investment must be made in completed and income-generating projects.
  • The instrument aims to ensure stable and predictable cash flow, as 90% of distributable net cash flow is distributed to investors.
  • These assets have long-term contracts that provide stable cash flow over the long term, typically 15 to 20 years, depending on the underlying assets.
  • They provide an opportunity for growth by adding more mining projects and increasing yield.
  • Public InvIT units can be listed and traded on a stock exchange (with a minimum subscription / purchase value of INR 1 lakh), like shares, thus offering the possibility of trading these units without any blocking.

Using InvITs

InvITs help infrastructure developers free up capital by monetizing completed assets. The infrastructure developer can transfer part of its income-generating assets to an InvIT, which can then issue units to its holders. Thus, InvITs stimulate the creation of infrastructure, providing an effective means of raising capital from investors – individual and institutional and financing the development of new projects.

On the other hand, InvITs offer individual investors the opportunity to invest in a long-term performance instrument in the infrastructure sector and help to establish higher standards of governance in the sector.

From a stakeholder perspective, the InvITs proposal for involved stakeholders includes:

  • Developers: Monetize operational assets to free up capital and develop new assets.
  • Lenders: Diversify exposure to better quality infrastructure assets with higher ratings.
  • Investors: Obtain stable and predictable returns from a portfolio of operational assets.
  • Government: Monetization to create space for further infrastructure development.

Benefits of investing in InvITs

Anyone investing in the capital markets looking for a combination of stable distributions and growth can invest in InvITs. InvITs offer advantages such as:

  1. Predictable and stable cash inflows – The Securities and Exchange Board of India (SEBI) market regulator requires InvITs to distribute a minimum of 90% of their cash income to investors on a semi-annual basis, making them ideal for long-term investors looking for cash flow regular.
  1. Low risk: In accordance with SEBI regulations, InvITs must invest at least 80% of their assets in completed and income-generating projects. InvITs cannot invest more than 10% of their assets in projects under construction. This reduces the risk for investors as it reduces the greatest risk associated with the infrastructure sector i.e. delay in completion, due to lack of regulatory approvals, financial close, etc.

    Leverage limits for InvITs are also regulated and defined by SEBI, thus protecting the company from the risk of over-indebtedness.

  1. High quality assets: InvITs house long-term infrastructure assets with superior credit quality and low demand and price risks, i.e., insured annuity cash flows (pre-regulated cash flows every year) such as electricity transmission, renewables, telecommunications towers, roads and gas distribution. These assets generally have a lifespan of 15 to 20 years with reliable counterparties providing clear visibility into returns.
  1. Liquidity: Exiting InvITs is similar to selling equity investments, making them very liquid and easy to sell without any lock-in period compared to closed-end mutual funds or other asset classes to fixed maturity or illiquid trade.
  1. Robust corporate governance: Regulatory requirements such as the management of InvITs by independent trustees and investment managers, as well as other measures such as semi-annual assessment by independent assessors, minority investor rights, mandatory rating requirements, Strict disclosure policies and tighter caps on leverage, all constitute strong corporate governance in InvITs.

    In addition, the board of directors of the investment manager must be composed of at least 50% of independent directors.

  1. Portfolio diversification: Portfolio diversification is a crucial aspect for all categories of investors. Especially in a market like this, diversification is not only important from a risk perspective but also from a return perspective. In the current scenario where interest rates for secure investments like term deposits are low, investors are looking to explore alternative investment options for better returns and capital appreciation without assuming high risk.
  1. Risk-adjusted returns: As there is visibility into the cash flows of the underlying assets held, InvITs can be tailored to hedge one’s portfolio against market volatility. This is also underlined by the beta (risk premium) of InvIT which is much lower than that of other equity products. So, when calculating the returns of InvITs, one should also look at risk-adjusted returns (not just absolute returns), as InvITs tend to generate better returns for lower risk.
  1. Efficient tax structure: InvITs benefit from a concessional long-term capital gains tax rate (such as equity) if the units are held for more than three years and sold on the stock exchange.

Risks of investing in InvITs

Investors should be aware of the risks below when investing in InvITs:

  • Operational risks: These include risks due to force majeure events that affect the availability of the underlying infrastructure projects and have a negative impact on revenues. Other operational risks may also include collection delays, one-time expenses, volume or traffic risk, and pricing risk.

    Operational risk can be mitigated through reliable payment security mechanisms and insurance coverage, etc. Investors should look for stable underlying assets with good quality management teams to get around these risks.

  • Refinancing risk: Infrastructure projects are mainly financed by debt. This contemplates large ultimately repayments and fluctuating interest rates, which can pose a refinancing risk. Investors should be careful not to opt for long-term AAA rated infrastructure assets with higher credit quality and low demand and price risks.
  • Regulatory risk: Infrastructure is a highly regulated industry in India. As the InvITs are in their infancy, regulations are still evolving.
  • Risk of return: Since public InvITs are traded on an exchange, unit prices can fluctuate, resulting in capital gains or losses, as in the case of stocks. Also, it is important to note that the cash flow of the trust depends on the underlying business. Thus, depending on the underlying activity and assumptions, the income of the underlying asset and therefore of the trust may be variable in certain years.


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These 4 measures indicate that Indian oil (NSE: IOC) uses debt intensively http://ctxetg.com/these-4-measures-indicate-that-indian-oil-nse-ioc-uses-debt-intensively/ http://ctxetg.com/these-4-measures-indicate-that-indian-oil-nse-ioc-uses-debt-intensively/#respond Fri, 16 Jul 2021 06:56:42 +0000 http://ctxetg.com/these-4-measures-indicate-that-indian-oil-nse-ioc-uses-debt-intensively/ Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but the fact that you suffer a permanent loss of capital. “. So it can be obvious that you need to consider debt, when you think about how risky a given stock is […]]]>

Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but the fact that you suffer a permanent loss of capital. “. So it can be obvious that you need to consider debt, when you think about how risky a given stock is because too much debt can sink a business. We can see that Indian Oil Company Limited (NSE: IOC) uses debt in its business. But the most important question is: what risk does this debt create?

When is debt dangerous?

Debt helps a business until the business struggles to repay it, either with new capital or with free cash flow. If things really go wrong, lenders can take over the business. However, a more common (but still painful) scenario is that he must raise new equity at low cost, thereby diluting shareholders over the long term. By replacing dilution, however, debt can be a very good tool for companies that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash flow and debt together.

Check out our latest review for Indian Oil

What is Indian Oil’s net debt?

You can click on the chart below for historical figures, but it shows Indian Oil had 1.01t of debt in March 2021, up from 1.22t a year earlier. However, he also had 140.1 billion yen in cash, so his net debt is 867.6 billion yen.

NSEI: History of IOC debt to equity July 16, 2021

A look at the liabilities of Indian Oil

According to the latest published balance sheet, Indian Oil had liabilities of 1.62 t yen due within 12 months and liabilities of 799.3 billion yen due beyond 12 months. In return, he had 140.1 billion yen in cash and 147.9 billion yen in receivables due within 12 months. It therefore has liabilities totaling 2.13 tonnes more than its combined cash and short-term receivables.

This deficit casts a shadow over ₹ 975.9b society, like a towering colossus of mere mortals. So we would be watching its record closely, without a doubt. Ultimately, Indian Oil would likely need a major recapitalization if its creditors demanded repayment.

We measure a company’s debt load relative to its earning capacity by looking at its net debt divided by its earnings before interest, taxes, depreciation, and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT) covers its interest costs (interest coverage). The advantage of this approach is that we take into account both the absolute amount of debt (with net debt versus EBITDA) and the actual interest charges associated with this debt (with its coverage rate). interests).

Indian Oil’s net debt of 2.1 times EBITDA suggests a graceful use of debt. And the attractive interest coverage (EBIT of 7.0 times the interest costs) certainly does do not do everything to dispel this impression. Notably, Indian Oil’s EBIT was higher than Elon Musk’s, gaining a whopping 184% from last year. When analyzing debt levels, the balance sheet is the obvious starting point. But it is future profits, more than anything, that will determine Indian Oil’s ability to maintain a healthy balance sheet going forward. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

Finally, a business can only repay its debts with hard cash, not with book profits. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Indian Oil has recorded negative free cash flow, in total. Debt is typically more expensive and almost always riskier in the hands of a business with negative free cash flow. Shareholders should hope for improvement.

Our point of view

To be frank, Indian Oil’s conversion of EBIT to free cash flow and its track record of controlling its total liabilities make us rather uncomfortable with its debt levels. But on the positive side, its EBIT growth rate is a good sign and makes us more optimistic. Overall, we think it’s fair to say that Indian Oil has enough debt that there is real risk around the balance sheet. If all goes well, this should increase returns, but on the other hand, the risk of permanent capital loss is increased by debt. When analyzing debt levels, the balance sheet is the obvious starting point. But at the end of the day, every business can contain risks that exist off the balance sheet. To this end, you should inquire about the 3 warning signs we spotted with Indian Oil (including 1 which is potentially serious).

If, after all of this, you’re more interested in a fast-growing company with a strong balance sheet, take a quick look at our list of cash net growth stocks.

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Guam’s Federal Public Debt Report Highlights Ahead of Challenges | Editorials http://ctxetg.com/guams-federal-public-debt-report-highlights-ahead-of-challenges-editorials/ http://ctxetg.com/guams-federal-public-debt-report-highlights-ahead-of-challenges-editorials/#respond Wed, 14 Jul 2021 14:00:00 +0000 http://ctxetg.com/guams-federal-public-debt-report-highlights-ahead-of-challenges-editorials/ In fiscal year 2021, even with tourist arrivals stagnating for months at the height of the COVID-19 pandemic, future financial challenges for the government of Guam, including its ability to pay creditors, have been obscured by the flow of cash assistance from the federal government. government. Income tax collection has increased – even when the […]]]>

In fiscal year 2021, even with tourist arrivals stagnating for months at the height of the COVID-19 pandemic, future financial challenges for the government of Guam, including its ability to pay creditors, have been obscured by the flow of cash assistance from the federal government. government.

Income tax collection has increased – even when the paychecks of more than 28,000 people have disappeared or been significantly reduced – during closings and closings of businesses. But the increase was largely temporary. The unemployment checks that thousands of Guamanians received were taxable beyond a certain threshold, so it looked like Guam’s government coffers were fine, at least temporarily, and it looked like people were going to agree. with their income.

But the reality has not yet penetrated. Unemployment benefits, which have paid nearly $ 1 billion to island households and the local government fund for more than a year, will end in less than two months.

In the best-case scenario, tourist arrivals will only total 130,000 tourists by the end of fiscal 2021, up from 1.6 million the year before the pandemic. But for now, GovGuam’s revenue picture still looks good, with June revenue exceeding expectations, and that’s also largely because the federal government has provided over $ 1 billion in aid to the government. local government in addition to unemployment funds.

End of federal aid in the event of a pandemic

However, the federal government is no longer expected to inject massive new amounts of pandemic cash assistance into state and territory governments – like GovGuam – once the local government uses what remains of the existing funding authorized by federal law.

We know that GovGuam still has around $ 600 million to spend, but half of that is expected to be used to start construction of a “medical campus” including a new Guam Memorial Hospital as well as new mental health and health facilities. public health.

When that $ 600 million is used up, GovGuam likely won’t see another massive infusion of funds from the federal government for a very long time.

The losses in tourism income – if prolonged – could soon test GovGuam’s ability to juggle money to pay its massive wage bill, continue government services at the level they are currently provided, and pay all of its money. creditors on time.

GovGuam doesn’t really have the funds for the rainy days, at least not of the scale needed to cover most of its expenses and pay off its debts if tourism continues on a slow and heavy rebound that could last for a few years.

Guam is grappling with significant public debt.

In a new report released by the U.S. Government Accountability Office, Guam’s total public debt stock remained constant at around $ 2.6 billion between fiscal years 2017 and 2019.

Guam’s total public debt stock as a percentage of GDP declined slightly from 44% to 42% of the island’s economy between fiscal years 2017 and 2019. The decrease would have been a good development, except that the figures date from before the pandemic. GovGuam’s public debt can be broken down to $ 16,048 for every man, woman and child in Guam in fiscal 2019, a slight drop from $ 16,106 two years earlier.

There is also the GovGuam pension and other post-employment benefit obligations for GovGuam retirees.

“While Guam’s public debt has remained constant, a decline in tourism and continued pension liabilities present fiscal risks,” according to GAO, which released a report on the state of public debt in Guam, Marianas. North, American Samoa, US Virgin Islands and Puerto. Rico. The report is required every two years after Puerto Rico’s local government fails to pay its creditors and goes bankrupt.

Guam tourism accounted for 34% of jobs

According to the GAO report, prior to the pandemic, tourism was “Guam’s biggest industry” and accounted for 34% of total employment. GovGuam officials said GAO tourism generated nearly $ 2.5 billion per year and $ 260 million in tax revenue before COVID-19.

The decline in tourism due to COVID-19 and pension liabilities are fiscal risks facing the government of Guam, according to the report.

GovGuam told GAO that the increase in construction activity stemming from military expansion projects had “somehow offset the decline in tourism.” There are more than $ 1 billion in active construction projects underway due to military build-up, GAO said, citing local officials.

Guam’s net pension liabilities reached $ 1.5 billion in fiscal 2019, which represented about 24% of Guam’s total economic output that year, but local officials told GAO that the local government was still on track to eliminate the funding gap by 2033, as required by Guam. law. In addition to the Government of Guam’s liability for local government retiree pensions, it also faces $ 1.9 billion in other post-government employee benefit liabilities as of fiscal 2019. Together, the Guam’s net pension and post-employment obligations accounted for 54% of the island’s gross. domestic product that year.

Despite the slowdown in tourism, GovGuam appears to have managed its public debt payments well – due to federal aid in the event of a pandemic. Some government agencies, such as the AB Won Pat Guam International Airport Authority, have received direct federal cash to help pay off its bond debt.

But now what? Federal funds to help mitigate the impact of the pandemic will dry up, and the $ 2.5 billion a year tourism economy has not really rebounded.

The development of aquaculture and agriculture as well as inviting foreign companies to come to Guam to resolve their differences are some of the ideas that GovGuam is working on to boost economic activity, but realistically these plans are not expected to make up for losses from tourism in the next year or two or so.

Maybe it’s time to rethink the Guam government’s $ 2 billion a year budget. But the public has been told – more than once – that there is no need to reduce GovGuam’s payroll, which is its biggest expense.

Guam’s government budget and spending continues at levels that belies the crunch of the island’s No.1 economic engine.

When will reality sink?


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Is Guararapes Confecções (BVMF: GUAR3) using too much debt? http://ctxetg.com/is-guararapes-confeccoes-bvmf-guar3-using-too-much-debt/ http://ctxetg.com/is-guararapes-confeccoes-bvmf-guar3-using-too-much-debt/#respond Tue, 13 Jul 2021 09:14:58 +0000 http://ctxetg.com/is-guararapes-confeccoes-bvmf-guar3-using-too-much-debt/ Howard Marks put it well when he said that, rather than worrying about stock price volatility, “The possibility of permanent loss is the risk that worries me … and every investor practices that I know is worried “. When we think about how risky a business is, we always like to look at its use […]]]>

Howard Marks put it well when he said that, rather than worrying about stock price volatility, “The possibility of permanent loss is the risk that worries me … and every investor practices that I know is worried “. When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. We notice that Guararapes Confecções SA (BVMF: GUAR3) has a debt on its balance sheet. But does this debt worry shareholders?

When is debt dangerous?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, then it exists at their mercy. If things really go wrong, lenders can take over the business. While it’s not too common, we often see indebted companies continually diluting their shareholders because lenders are forcing them to raise capital at a ridiculous price. That said, the most common situation is where a business manages its debt reasonably well – and to its own advantage. The first step in examining a company’s debt levels is to consider its cash flow and debt together.

Check out our latest review for Guararapes Confecções

What is the debt of Guararapes Confecções?

You can click on the graph below for historical figures, but it shows that in March 2021, Guararapes Confecções had a debt of 3.86 billion reais, an increase from 2.93 billion reais, on a year. However, he has 2.75 billion reais in cash offsetting this, which leads to a net debt of around 1.11 billion reais.

BOVESPA: GUAR3 History of debt to equity July 13, 2021

How healthy is Guararapes Confecções’ track record?

Zooming in on the latest balance sheet data, we can see that Guararapes Confecções had a liability of 4.72 billion reais due within 12 months and a liability of 3.71 billion reais beyond. In compensation for these obligations, it had cash of 2.75 billion reais as well as claims valued at 3.81 billion reais due within 12 months. Thus, its liabilities exceed the sum of its cash and (short-term) receivables by 1.86 billion reais.

Considering that Guararapes Confecções has a market cap of R $ 10.7 billion, it is hard to believe that these liabilities pose a big threat. Having said that, it is clear that we must continue to monitor his record lest it get worse. There is no doubt that we learn the most about debt from the balance sheet. But it is future profits, more than anything, that will determine Guararapes Confecções’ ability to maintain a healthy balance sheet in the future. So, if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

In the past year, Guararapes Confecções has incurred a loss before interest and taxes and has actually reduced its income by 25%, to 5.9 billion reais. It makes us nervous, to say the least.

Emptor Warning

While Guararapes Confecções’s drop in revenue is about as comforting as a wet blanket, it’s safe to say that its earnings before interest and taxes (EBIT) are even less appealing. Indeed, he lost 179 million reais in EBIT. Considering that besides the liabilities mentioned above, we are not convinced that the company should use so much debt. We therefore believe that its record is a bit strained, but not irreparable. We would feel better if he turned his loss of 85 million reais over twelve months into profit. In the meantime, we consider the title to be very risky. When analyzing debt levels, the balance sheet is the obvious starting point. However, not all investment risks lie on the balance sheet – far from it. We have identified 3 warning signs with Guararapes Confecções, and understanding them should be part of your investment process.

At the end of the day, sometimes it’s easier to focus on businesses that don’t even need to go into debt. Readers can access a list of growth stocks with zero net debt 100% free, at present.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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Internationa restaurant brands – GuruFocus.com http://ctxetg.com/internationa-restaurant-brands-gurufocus-com/ http://ctxetg.com/internationa-restaurant-brands-gurufocus-com/#respond Sun, 11 Jul 2021 19:01:42 +0000 http://ctxetg.com/internationa-restaurant-brands-gurufocus-com/ Restaurant Brands International (NYSE: QSR, 30-year Financials) stock appears to be properly valued, according to GuruFocus Value’s calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ […]]]>

Restaurant Brands International (NYSE: QSR, 30-year Financials) stock appears to be properly valued, according to GuruFocus Value’s calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 64.32 per share and market cap of $ 19.6 billion, Restaurant Brands International stock is believed to be fairly valued. The GF value for Restaurant Brands International is shown in the table below.

Given that Restaurant Brands International is fairly valued, its long-term stock return is likely to be close to its business growth rate, which has averaged 3.5% over the past three years and is expected to grow by 7 , 63% per year over the next three years. at five years.

Link: These companies can offer higher future returns with reduced risk.

It is always important to check the financial strength of a company before buying its shares. Investing in companies with low financial strength presents a higher risk of permanent loss. Examining the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a business. Restaurant Brands International has a cash-to-debt ratio of 0.11, which is worse than 77% of companies in the restaurant industry. The overall financial strength of Restaurant Brands International is 3 in 10, indicating that the financial strength of Restaurant Brands International is low. Here is Restaurant Brands International’s debt and cash flow for the past several years:

1414298599495393280.png

Companies that have historically been profitable over the long term pose less risk to investors who want to buy stocks. Higher profit margins usually dictate a better investment compared to a business with lower profit margins. Restaurant Brands International has been profitable 9 in the past 10 years. In the past twelve months, the company has achieved sales of $ 5 billion and earnings of $ 1.7 per share. Its operating margin is 32.06%, which ranks better than 97% of companies in the restaurant industry. Overall, Restaurant Brands International’s profitability is ranked 7 out of 10, indicating acceptable profitability. Here is Restaurant Brands International’s sales and net income for the past few years:

1414298603328987136.png

Growth is probably one of the most important factors in the valuation of a business. GuruFocus research has found that growth is closely tied to the long-term performance of a company’s stocks. If a company’s business is growing, the business typically creates value for its shareholders, especially if the growth is profitable. Likewise, if the income and profits of a business decrease, the value of the business will decrease. Restaurant Brands International’s 3-year average revenue growth rate is over 78% for businesses in the restaurant industry. Restaurant Brands International’s 3-year average EBITDA growth rate is -5.1%, which is in line with the average for companies in the restaurant industry.

Another method of determining a company’s profitability is to compare its return on invested capital to the weighted average cost of capital. Return on Invested Capital (ROIC) measures the extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies that the company creates value for the shareholders. Over the past 12 months, Restaurant Brands International’s return on invested capital is 7.12 and its cost of capital is 6.50. Restaurant Brands International’s historic ROIC vs WACC comparison is shown below:

1414298607426822144.png

Overall, Restaurant Brands International (NYSE: QSR, 30-year Financials) shares are showing all signs of a fair valuation. The company’s financial situation is bad and its profitability is fair. Its growth is in the mid-range of companies in the restaurant industry. To learn more about Restaurant Brands International’s shares, you can view its 30-year financial data here.

To find out about high-quality companies that can deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.


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