Blue Thunder Debt
| BLUE Stock | CAD 0.15 0.01 7.14% |
Blue Thunder's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Blue Thunder's financial risk is the risk to Blue Thunder 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 Blue Thunder'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 Blue Thunder 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 Blue Thunder to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Blue Thunder is said to be less leveraged. If creditors hold a majority of Blue Thunder's assets, the Company is said to be highly leveraged.
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Blue Thunder Mining Debt to Cash Allocation
Many companies such as Blue Thunder, 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.
Blue Thunder Mining has accumulated 895.98 K in total debt. Blue Thunder Mining has a current ratio of 2.56, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Blue Thunder until it has trouble settling it off, either with new capital or with free cash flow. So, Blue Thunder'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 Blue Thunder Mining sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Blue to invest in growth at high rates of return. When we think about Blue Thunder's use of debt, we should always consider it together with cash and equity.Blue Thunder 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 Blue Thunder's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Blue Thunder, which in turn will lower the firm's financial flexibility.Blue Thunder Corporate Bonds Issued
Understaning Blue Thunder Use of Financial Leverage
Understanding the structure of Blue Thunder's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Blue Thunder'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.
Blue Thunder Mining Inc., a mineral exploration company, focuses on identification, evaluation, acquisition, and exploration of gold and base metal properties in Canada. It holds a 100 percent interest in the Muus project that include 935 claims covering approximately 51,607 hectares located in the southern part of the James Bay area of the Province of Quebec. BLUE THUNDER operates under Gold classification in Exotistan and is traded on Commodity Exchange. Please read more on our technical analysis page.
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When running Blue Thunder's price analysis, check to measure Blue Thunder'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 Blue Thunder is operating at the current time. Most of Blue Thunder's value examination focuses on studying past and present price action to predict the probability of Blue Thunder's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Blue Thunder's price. Additionally, you may evaluate how the addition of Blue Thunder to your portfolios can decrease your overall portfolio volatility.
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.