Akr Corporindo Current Financial Leverage
AKRA Stock | IDR 1,795 50.00 2.71% |
Akr Corporindo Tbk holds a debt-to-equity ratio of 0.0. Akr Corporindo's financial risk is the risk to Akr Corporindo stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Given that Akr Corporindo'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 Akr Corporindo 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 Akr Corporindo to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Akr Corporindo is said to be less leveraged. If creditors hold a majority of Akr Corporindo's assets, the Company is said to be highly leveraged.
Akr |
Akr Corporindo Financial Leverage Rating
Akr Corporindo Tbk bond ratings play a critical role in determining how much Akr Corporindo have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Akr Corporindo's borrowing costs.Akr Corporindo 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 Akr Corporindo's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Akr Corporindo, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an Akr Corporindo debt ratio should be compared their industry average or other competing firms.Understaning Akr Corporindo Use of Financial Leverage
Akr Corporindo financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Akr Corporindo's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Akr Corporindo assets, the company is considered highly leveraged. Understanding the composition and structure of overall Akr Corporindo debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to Akr Corporindo's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Akr Corporindo's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Please read more on our technical analysis page.
Pair Trading with Akr Corporindo
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Akr Corporindo position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Akr Corporindo will appreciate offsetting losses from the drop in the long position's value.Moving together with Akr Stock
0.7 | UNTR | United Tractors Tbk | PairCorr |
0.62 | TKIM | Pabrik Kertas Tjiwi Earnings Call This Week | PairCorr |
Moving against Akr Stock
0.9 | MCAS | M Cash Integrasi Earnings Call This Week | PairCorr |
0.73 | BYAN | Bayan Resources Tbk | PairCorr |
0.72 | MLBI | Multi Bintang Indonesia Earnings Call This Week | PairCorr |
0.71 | INTP | Indocement Tunggal Earnings Call This Week | PairCorr |
0.66 | GGRM | Gudang Garam Tbk | PairCorr |
The ability to find closely correlated positions to Akr Corporindo could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Akr Corporindo when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Akr Corporindo - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Akr Corporindo Tbk to buy it.
The correlation of Akr Corporindo is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Akr Corporindo moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Akr Corporindo Tbk moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Akr Corporindo can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of Akr Corporindo Fundamentals Over Time. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Complementary Tools for Akr Stock analysis
When running Akr Corporindo's price analysis, check to measure Akr Corporindo's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Akr Corporindo is operating at the current time. Most of Akr Corporindo's value examination focuses on studying past and present price action to predict the probability of Akr Corporindo's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Akr Corporindo's price. Additionally, you may evaluate how the addition of Akr Corporindo to your portfolios can decrease your overall portfolio volatility.
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Stocks Directory Find actively traded stocks across global markets |
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.