# Blue Hat Current Financial Leverage

BHAT | Stock | ## USD 0.88 0.04 4.35% |

Blue Hat's 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. Blue Hat's financial risk is the risk to Blue Hat 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).

Continue to the analysis of Blue Hat Fundamentals Over Time. Blue Hat |

### Blue Hat Current Financial Burden

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

### Asset vs Debt

### Equity vs Debt

For most companies, including Blue Hat, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Blue Hat Interactive 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 Blue Hat'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 Blue Hat 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 Blue Hat to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Blue Hat is said to be less leveraged. If creditors hold a majority of Blue Hat's assets, the company is said to be highly leveraged.

Given the importance of Blue Hat's capital structure, the first step in the capital decision process is for the management of Blue Hat to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Blue Hat Interactive to issue bonds at a reasonable cost.

## Blue Hat Financial Leverage Rating

Blue Hat Interactive bond ratings play a critical role in determining how much Blue Hat 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 Blue Hat's borrowing costs.## Blue Hat Interactive Debt to Cash Allocation

As Blue Hat Interactive follows its natural business cycle, the capital allocation decisions will not magically go away. Blue Hat'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 currently holds 1.57 **M**in liabilities with Debt to Equity

**(D/E)**ratio of 0.09, which may suggest the company is not taking enough advantage from borrowing. Blue Hat Interactive has a current ratio of 1.17, suggesting that it is in a questionable position to pay out its financial obligations when due. Debt can assist Blue Hat until it has trouble settling it off, either with new capital or with free cash flow. So, Blue Hat'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 Blue Hat Interactive sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Blue Hat to invest in growth at high rates of return. When we think about Blue Hat's use of debt, we should always consider it together with cash and equity.

## Blue Hat 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 Blue Hat's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Blue Hat, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Blue Hat debt ratio should be compared their industry average or other competing firms.## Understaning Blue Hat Use of Financial Leverage

Blue Hat financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Blue Hat'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 Blue Hat assets, the company is considered highly leveraged. Understanding the composition and structure of overall Blue Hat 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.

Fujian Blue Hat Interactive Entertainment Technology Ltd. engages in the designing, producing, promoting, and selling animated toys with mobile games features, intellectual property, and peripheral derivatives features worldwide. Fujian Blue Hat Interactive Entertainment Technology Ltd. was incorporated in 2010 and is based in Xiamen, China. Blue Hat operates under Electronic Gaming Multimedia classification in the United States and is traded on NASDAQ Exchange. It employs 80 people. Please read more on our technical analysis page.

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## Pair Trading with Blue Hat

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 Blue Hat 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 Blue Hat will appreciate offsetting losses from the drop in the long position's value.### Moving against Blue Hat

- | 0.59 | FDS | Factset Research Systems | Fiscal Year End 27th of September 2022 | PairCorr |

The ability to find closely correlated positions to Blue Hat could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Blue Hat 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 Blue Hat - 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 Blue Hat Interactive to buy it.

The correlation of Blue Hat is a statistical measure of how it moves in relation to other equities. 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 Blue Hat moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Blue Hat Interactive 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 Blue Hat 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.Continue to the analysis of Blue Hat Fundamentals Over Time. Note that the Blue Hat Interactive information on this page should be used as a complementary analysis to other Blue Hat'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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When running Blue Hat Interactive price analysis, check to measure Blue Hat'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 Blue Hat is operating at the current time. Most of Blue Hat's value examination focuses on studying past and present price action to predict the probability of Blue Hat's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Blue Hat's price. Additionally, you may evaluate how the addition of Blue Hat to your portfolios can decrease your overall portfolio volatility.

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Is Blue Hat'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 Blue Hat. If investors know Blue Hat 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 Blue Hat listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.

The market value of Blue Hat Interactive is measured differently than its book value, which is the value of Blue Hat that is recorded on the company's balance sheet. Investors also form their own opinion of Blue Hat's value that differs from its market value or its book value, called intrinsic value, which is Blue Hat'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 Blue Hat's market value can be influenced by many factors that don't directly affect Blue Hat'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 Blue Hat's value and its price as these two are different measures arrived at by different means. Investors typically determine Blue Hat value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Blue Hat'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.