Forum Energy Debt

FET Stock  USD 14.02  0.02  0.14%   
Forum Energy Technologies holds a debt-to-equity ratio of 0.912. At this time, Forum Energy's Total Debt To Capitalization is comparatively stable compared to the past year. Debt Equity Ratio is likely to gain to 0.43 in 2024, whereas Interest Debt Per Share is likely to drop 14.57 in 2024. . Forum Energy's financial risk is the risk to Forum Energy stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Forum Energy'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. Forum Energy'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 Forum Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Forum Energy's stakeholders.

Forum Energy Quarterly Net Debt

278.56 Million

For most companies, including Forum Energy, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Forum Energy Technologies, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Forum Energy's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
0.398
Book Value
35.982
Operating Margin
0.0457
Profit Margin
(0.03)
Return On Assets
0.0197
Given that Forum Energy'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 Forum Energy 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 Forum Energy to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Forum Energy is said to be less leveraged. If creditors hold a majority of Forum Energy's assets, the Company is said to be highly leveraged.
At this time, Forum Energy's Liabilities And Stockholders Equity is comparatively stable compared to the past year. Non Current Liabilities Total is likely to gain to about 350.7 M in 2024, whereas Total Current Liabilities is likely to drop slightly above 158.9 M in 2024.
  
Check out the analysis of Forum Energy Fundamentals Over Time.

Forum Energy Bond Ratings

Forum Energy Technologies financial ratings play a critical role in determining how much Forum Energy 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 Forum Energy's borrowing costs.
Piotroski F Score
6
HealthyView
Beneish M Score
(1.89)
Possible ManipulatorView

Forum Energy Technologies Debt to Cash Allocation

Forum Energy Technologies has 201.4 M in debt with debt to equity (D/E) ratio of 0.91, which is OK given its current industry classification. Forum Energy Technologies has a current ratio of 2.38, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Forum to invest in growth at high rates of return.

Forum Energy Common Stock Shares Outstanding Over Time

Forum Energy Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Forum Energy uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

Forum Energy Debt Ratio

    
  30.0   
It appears slightly above 70% of Forum Energy's assets are financed through equity. 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 Forum Energy's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Forum Energy, which in turn will lower the firm's financial flexibility.

Forum Energy Corporate Bonds Issued

Forum Short Long Term Debt Total

Short Long Term Debt Total

303.83 Million

At this time, Forum Energy's Short and Long Term Debt Total is comparatively stable compared to the past year.

Understaning Forum Energy Use of Financial Leverage

Forum Energy's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Forum Energy's current equity. If creditors own a majority of Forum Energy's assets, the company is considered highly leveraged. Understanding the composition and structure of Forum Energy's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Last ReportedProjected for Next Year
Short and Long Term Debt Total201.4 M303.8 M
Net Debt155.2 M247.2 M
Short Term Debt10.4 M10.9 M
Long Term Debt129.6 M123.1 M
Long Term Debt Total215.2 M314.3 M
Short and Long Term Debt1.2 M924.3 K
Net Debt To EBITDA 2.65  2.79 
Debt To Equity 0.34  0.43 
Interest Debt Per Share 15.33  14.57 
Debt To Assets 0.17  0.30 
Long Term Debt To Capitalization 0.24  0.26 
Total Debt To Capitalization 0.25  0.27 
Debt Equity Ratio 0.34  0.43 
Debt Ratio 0.17  0.30 
Cash Flow To Debt Ratio 0.06  0.05 
Please read more on our technical analysis page.

Thematic Opportunities

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Additional Tools for Forum Stock Analysis

When running Forum Energy's price analysis, check to measure Forum Energy'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 Forum Energy is operating at the current time. Most of Forum Energy's value examination focuses on studying past and present price action to predict the probability of Forum Energy's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Forum Energy's price. Additionally, you may evaluate how the addition of Forum Energy 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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.