|USD 7.98 0.40 5.28%
Four Seasons' 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. Four Seasons' financial risk is the risk to Four Seasons 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).
Four Seasons' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations
. Four Seasons' 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 Four Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Four Seasons' stakeholders.
For most companies, including Four Seasons, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Four Seasons Education 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.
Return On Assets
At this time, Four Seasons' Total Debt
is comparatively stable as compared to the past year. Debt Current
is likely to gain to about 2.3 M
in 2024, whereas Issuance Repayment of Debt Securities
is likely to drop (554.2 K
) in 2024.
Check out the analysis of Four Seasons Fundamentals Over Time
Four Seasons Financial Leverage Rating
Four Seasons Education bond ratings play a critical role in determining how much Four Seasons 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 Four Seasons' borrowing costs.
Four Seasons Education Debt to Cash Allocation
As Four Seasons Education follows its natural business cycle, the capital allocation decisions will not magically go away. Four Seasons' 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 currently holds 3.73 M
in liabilities with Debt to Equity (D/E)
ratio of 0.02, which may suggest the company is not taking enough advantage from borrowing. Four Seasons Education has a current ratio of 5.51, suggesting that it is liquid enough
and is able to pay its financial obligations when due. Debt can assist Four Seasons until it has trouble settling it off, either with new capital or with free cash flow. So, Four Seasons' 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 Four Seasons Education sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Four to invest in growth at high rates of return. When we think about Four Seasons' use of debt, we should always consider it together with cash and equity.
Four Seasons Accumulated Other Comprehensive Income Over Time
Four Seasons Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Four Seasons 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.
Four Seasons Debt Ratio
It appears most of the Four Seasons' 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 Four Seasons' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Four Seasons, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a Four Seasons debt ratio should be compared their industry average or other competing firms.
Four Seasons Education Historical Liabilities
While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Four Seasons, understanding its historical liability is critical in projecting Four Seasons' future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how Four Seasons uses its financing power over time.
In order to fund their growth, businesses such as Four Seasons widely use Financial Leverage. For most companies, financial capital is raised by issuing debt securities and by selling common stock. The debt and equity that make up Four Seasons' capital structure have many risks and return implications
. Leverage is an investment strategy of using borrowed money to increase the potential return of an investment. Please note, 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.
Understaning Four Seasons Use of Financial Leverage
Four Seasons financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Four Seasons'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 Four Seasons assets, the company is considered highly leveraged. Understanding the composition and structure
of overall Four Seasons 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 Four Seasons' 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 Four Seasons' 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).
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When determining whether Four Seasons Education is a good investment, qualitative aspects like company management
, corporate governance, and ethical practices play a significant role. A comparison with peer companies
also provides context and helps to understand if Four Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Four Seasons Education Stock. Highlighted below are key reports to facilitate an investment decision about Four Seasons Education Stock:
Check out the analysis of Four Seasons Fundamentals Over Time
Note that the Four Seasons Education information on this page should be used as a complementary analysis to other Four Seasons' 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 Share Portfolio
module to track or share privately all of your investments from the convenience of any device.
Complementary Tools for Four Stock analysis
When running Four Seasons' price analysis, check to measure Four Seasons' 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 Four Seasons is operating at the current time. Most of Four Seasons' value examination focuses on studying past and present price action to predict the probability of Four Seasons' future price movements
. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Four Seasons' price. Additionally, you may evaluate how the addition of Four Seasons to your portfolios can decrease your overall portfolio volatility.
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Is Four Seasons' 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 Four Seasons
. If investors know Four 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 Four Seasons 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
Revenue Per Share
Quarterly Revenue Growth
Return On Assets
The market value of Four Seasons Education
is measured differently than its book value, which is the value of Four that is recorded on the company's balance sheet. Investors also form their own opinion of Four Seasons' value that differs from its market value or its book value, called intrinsic value, which is Four Seasons' 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 Four Seasons' market value can be influenced by many factors that don't directly affect Four Seasons' 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 Four Seasons' value and its price as these two are different measures arrived at by different means. Investors typically determine if Four Seasons is a good investment
by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Four Seasons' 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.
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.