Granite Real Debt
| GRT-UN Stock | CAD 75.61 0.73 0.97% |
Granite Real Estate has over 3.1 Billion in debt which may indicate that it relies heavily on debt financing. At present, Granite Real's Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting. The current year's Net Debt is expected to grow to about 3.1 B, whereas Long Term Debt is forecasted to decline to about 1.5 B. With a high degree of financial leverage come high-interest payments, which usually reduce Granite Real's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Granite Real'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. Granite Real'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 Granite Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Granite Real's stakeholders.
Granite Real Quarterly Net Debt |
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For most companies, including Granite Real, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Granite Real Estate, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Granite Real'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 0.8627 | Book Value 86.797 | Operating Margin 0.7475 | Profit Margin 0.5594 | Return On Assets 0.0283 |
Given that Granite Real'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 Granite Real 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 Granite Real to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Granite Real is said to be less leveraged. If creditors hold a majority of Granite Real's assets, the Company is said to be highly leveraged.
At present, Granite Real's Liabilities And Stockholders Equity is projected to increase significantly based on the last few years of reporting. The current year's Non Current Liabilities Total is expected to grow to about 3.6 B, whereas Total Current Liabilities is forecasted to decline to about 221.7 M. Granite |
Granite Real Estate Debt to Cash Allocation
Granite Real Estate has accumulated 3.1 B in total debt with debt to equity ratio (D/E) of 46.6, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Granite Real Estate has a current ratio of 7.11, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Granite Real until it has trouble settling it off, either with new capital or with free cash flow. So, Granite Real'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 Granite Real Estate sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Granite to invest in growth at high rates of return. When we think about Granite Real's use of debt, we should always consider it together with cash and equity.Granite Real Total Assets Over Time
Granite Real Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Granite Real 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.Granite Real Debt Ratio | 36.0 |
Granite Real Corporate Bonds Issued
Most Granite bonds can be classified according to their maturity, which is the date when Granite Real Estate has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Granite Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Granite Real Use of Financial Leverage
Granite Real's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Granite Real's total debt position, including all outstanding debt obligations, and compares it with Granite Real's equity. Financial leverage can amplify the potential profits to Granite Real's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Granite Real is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 3.1 B | 3.3 B | |
| Net Debt | 3 B | 3.1 B | |
| Short Term Debt | 244.9 M | 257.1 M | |
| Long Term Debt | 2.8 B | 1.5 B | |
| Short and Long Term Debt | 244.1 M | 215.5 M | |
| Net Debt To EBITDA | 14.68 | 15.42 | |
| Debt To Equity | 0.58 | 0.61 | |
| Interest Debt Per Share | 49.54 | 52.02 | |
| Debt To Assets | 0.34 | 0.36 | |
| Long Term Debt To Capitalization | 0.35 | 0.18 | |
| Total Debt To Capitalization | 0.37 | 0.19 | |
| Debt Equity Ratio | 0.58 | 0.61 | |
| Debt Ratio | 0.34 | 0.36 | |
| Cash Flow To Debt Ratio | 0.10 | 0.10 |
Pair Trading with Granite Real
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 Granite Real 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 Granite Real will appreciate offsetting losses from the drop in the long position's value.Moving together with Granite Stock
Moving against Granite Stock
The ability to find closely correlated positions to Granite Real could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Granite Real 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 Granite Real - 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 Granite Real Estate to buy it.
The correlation of Granite Real 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 Granite Real moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Granite Real Estate 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 Granite Real 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.Other Information on Investing in Granite Stock
Granite Real financial ratios help investors to determine whether Granite Stock is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Granite with respect to the benefits of owning Granite Real security.
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.