Partners Current Financial Leverage
| PGPHF Stock | USD 1,335 23.31 1.78% |
Partners Group holds a debt-to-equity ratio of 0.544. Partners' financial risk is the risk to Partners 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
Partners' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Partners' 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 Partners Pink Sheet's retail investors understand whether an upcoming fall or rise in the market will negatively affect Partners' stakeholders.
For most companies, including Partners, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Partners Group 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.
Given that Partners' 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 Partners 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 Partners to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Partners is said to be less leveraged. If creditors hold a majority of Partners' assets, the Company is said to be highly leveraged.
Partners |
Partners Financial Leverage Rating
Partners Group bond ratings play a critical role in determining how much Partners 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 Partners' borrowing costs.Partners Group Debt to Cash Allocation
As Partners Group follows its natural business cycle, the capital allocation decisions will not magically go away. Partners' 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 has accumulated 799.1 M in total debt with debt to equity ratio (D/E) of 0.54, which is about average as compared to similar companies. Partners Group has a current ratio of 3.04, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Partners until it has trouble settling it off, either with new capital or with free cash flow. So, Partners' 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 Partners Group sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Partners to invest in growth at high rates of return. When we think about Partners' use of debt, we should always consider it together with cash and equity.Partners 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 Partners' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Partners, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Partners debt ratio should be compared their industry average or other competing firms.Understaning Partners Use of Financial Leverage
Partners financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Partners'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 Partners assets, the company is considered highly leveraged. Understanding the composition and structure of overall Partners 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 Partners' 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 Partners' 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).
Partners Group Holding AG is a private equity firm specializing in direct, secondary, and primary investments across private equity, private real estate, private infrastructure, and private debt. Partners Group Holding AG was founded in 1996 and is based in Baar, Switzerland with additional offices across North America, South America, Europe, Australia, and Asia. Partners operates under Asset Management classification in the United States and is traded on OTC Exchange. It employs 1657 people. Please read more on our technical analysis page.
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Check out the analysis of Partners Fundamentals Over Time. Note that the Partners Group information on this page should be used as a complementary analysis to other Partners' 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Complementary Tools for Partners Pink Sheet analysis
When running Partners' price analysis, check to measure Partners' 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 Partners is operating at the current time. Most of Partners' value examination focuses on studying past and present price action to predict the probability of Partners' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Partners' price. Additionally, you may evaluate how the addition of Partners to your portfolios can decrease your overall portfolio volatility.
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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.