Dupont De Current Financial Leverage
DD Stock | USD 76.67 0.17 0.22% |
Dupont De Nemours holds a debt-to-equity ratio of 0.482. At present, Dupont De's Net Debt is projected to decrease significantly based on the last few years of reporting. The current year's Long Term Debt is expected to grow to about 12.1 B, whereas Short and Long Term Debt is forecasted to decline to about 256.5 M. Dupont De's financial risk is the risk to Dupont De 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).
Asset vs Debt
Equity vs Debt
Dupont De'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. Dupont De'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 Dupont Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Dupont De's stakeholders.
Dupont De Quarterly Net Debt |
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For most companies, including Dupont De, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Dupont De Nemours the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book 1.3158 | Book Value 56.448 | Operating Margin 0.1373 | Profit Margin 0.0351 | Return On Assets 0.0267 |
Given that Dupont De'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 Dupont De 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 Dupont De to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Dupont De is said to be less leveraged. If creditors hold a majority of Dupont De's assets, the Company is said to be highly leveraged.
At present, Dupont De's Net Debt is projected to decrease significantly based on the last few years of reporting. The current year's Long Term Debt is expected to grow to about 12.1 B, whereas Short and Long Term Debt is forecasted to decline to about 256.5 M. Dupont |
Dupont De Financial Leverage Rating
Dupont De Nemours bond ratings play a critical role in determining how much Dupont De 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 Dupont De's borrowing costs.Piotroski F Score | 4 Poor |
Beneish M Score | -2.55 Unlikely Manipulator |
Dupont De Nemours Debt to Cash Allocation
As Dupont De Nemours follows its natural business cycle, the capital allocation decisions will not magically go away. Dupont De's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies 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.
The company reports 8.29 B of total liabilities with total debt to equity ratio (D/E) of 0.48, which is normal for its line of buisiness. Dupont De Nemours has a current ratio of 2.34, indicating that it is in good position to pay out its debt commitments in time. Debt can assist Dupont De until it has trouble settling it off, either with new capital or with free cash flow. So, Dupont De'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 Dupont De Nemours sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Dupont to invest in growth at high rates of return. When we think about Dupont De's use of debt, we should always consider it together with cash and equity.Dupont De Total Assets Over Time
Dupont De 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 Dupont De's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Dupont De, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Dupont De debt ratio should be compared their industry average or other competing firms.Dupont Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Dupont De Use of Financial Leverage
Dupont De financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Dupont De'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 Dupont De assets, the company is considered highly leveraged. Understanding the composition and structure of overall Dupont De 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 Dupont De'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 Dupont De'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).
Last Reported | Projected for 2024 | ||
Short and Long Term Debt Total | 8.3 B | 13.8 B | |
Net Debt | 5.5 B | 10.6 B | |
Short Term Debt | 97 M | 92.2 M | |
Long Term Debt | 7.7 B | 12.1 B | |
Short and Long Term Debt | 270 M | 256.5 M | |
Long Term Debt Total | 7 B | 6.6 B | |
Long Term Debt To Capitalization | 0.24 | 0.42 | |
Total Debt To Capitalization | 0.25 | 0.46 | |
Debt Equity Ratio | 0.32 | 0.31 | |
Debt Ratio | 0.20 | 0.29 | |
Cash Flow To Debt Ratio | 0.28 | 0.35 |
Pair Trading with Dupont De
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 Dupont De 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 Dupont De will appreciate offsetting losses from the drop in the long position's value.Moving against Dupont Stock
0.54 | WDFC | WD-40 Company Report 4th of April 2024 | PairCorr |
The ability to find closely correlated positions to Dupont De could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Dupont De 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 Dupont De - 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 Dupont De Nemours to buy it.
The correlation of Dupont De 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 Dupont De moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Dupont De Nemours 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 Dupont De 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 Dupont De Fundamentals Over Time. Note that the Dupont De Nemours information on this page should be used as a complementary analysis to other Dupont De's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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When running Dupont De's price analysis, check to measure Dupont De'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 Dupont De is operating at the current time. Most of Dupont De's value examination focuses on studying past and present price action to predict the probability of Dupont De's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Dupont De's price. Additionally, you may evaluate how the addition of Dupont De to your portfolios can decrease your overall portfolio volatility.
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Is Dupont De's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Dupont De. If investors know Dupont will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Dupont De listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.04) | Dividend Share 1.44 | Earnings Share 1.09 | Revenue Per Share 26.824 | Quarterly Revenue Growth (0.07) |
The market value of Dupont De Nemours is measured differently than its book value, which is the value of Dupont that is recorded on the company's balance sheet. Investors also form their own opinion of Dupont De's value that differs from its market value or its book value, called intrinsic value, which is Dupont De's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Dupont De's market value can be influenced by many factors that don't directly affect Dupont De's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Dupont De's value and its price as these two are different measures arrived at by different means. Investors typically determine if Dupont De is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Dupont De's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
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.