Ero Copper Current Financial Leverage

ERO -  USA Etf  

USD 13.98  0.12  0.87%

Ero Copper'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. Ero Copper's financial risk is the risk to Ero Copper 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 Ero Copper Fundamentals Over Time.

Ero Copper Bonds 

 
Refresh
Ero Copper Total Debt is quite stable at the moment as compared to the past year. The etf's current value of Total Debt is estimated at 199.16 Million. Debt Current is expected to rise to about 14.2 M this year, although the value of Issuance Repayment of Debt Securities will most likely fall to (3 M).

Ero Copper Current Financial Burden

Ero Copper'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. Ero Copper's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the ETF is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Ero Copper Etf's retail investors understand whether an upcoming fall or rise in the market will negatively affect Ero Copper's stakeholders.

Asset vs Debt

Equity vs Debt

For most companies, including Ero Copper, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Ero Copper Corp 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 the importance of Ero Copper's capital structure, the first step in the capital decision process is for the management of Ero Copper 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 Ero Copper Corp to issue bonds at a reasonable cost.

Ero Copper Financial Leverage Rating

Ero Copper Corp bond ratings play a critical role in determining how much Ero Copper 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 Ero Copper's borrowing costs.
Overall Bond Rating
Not Rated
Average S&P Rating
N/A

Ero Copper Corp Debt to Cash Allocation

As Ero Copper Corp follows its natural business cycle, the capital allocation decisions will not magically go away. Ero Copper'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 has 61.41 M in debt with debt to equity (D/E) ratio of 0.17, which may show that the company is not taking advantage of profits from borrowing. Ero Copper Corp has a current ratio of 1.73, which is typical for the industry and considered as normal.

Ero Copper Total Assets Over Time

Ero Copper Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Ero Copper 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.

Ero Copper Debt Ratio

    
  34.41   
It seems about 65% of Ero Copper's 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 Ero Copper's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Ero Copper, which in turn will lower the firm's financial flexibility. Like all other financial ratios, an Ero Copper debt ratio should be compared their industry average or other competing firms.
Share Download
Share Download

Ero Copper Corp Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Ero Copper, understanding its historical liability is critical in projecting Ero Copper's 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 Ero Copper uses its financing power over time.
In order to fund their growth, businesses such as Ero Copper 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 Ero Copper's 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 Ero Copper Use of Financial Leverage

Ero Copper financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Ero Copper'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 Ero Copper assets, the company is considered highly leveraged. Understanding the composition and structure of overall Ero Copper 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.
Last ReportedProjected for 2022
Total Debt195.3 M199.2 M
Debt Current12.5 M14.2 M
Debt Non Current179.3 M180.3 M
Issuance Repayment of Debt Securities-2.8 M-3 M
Debt to Equity Ratio 1.53  1.57 
Ero Copper Corp., a mining company, focuses on the production, exploration, and development of mining projects in Brazil. Ero Copper is listed under Copper in the United States and is traded on New York Stock Exchange exchange.
Please read more on our technical analysis page.

Be your own money manager

Our tools can tell you how much better you can do entering a position in Ero Copper without increasing your portfolio risk or giving up expected return. As an individual investor, you need to find a reliable way to track all your investment portfolios. However, your requirements will often be based on how much of the process you decide to do yourself. In addition to allowing all investors analytical transparency into all their portfolios, our tools can evaluate.risk-adjusted returns of your individual positions relative to your overall portfolio.

Did you try this?

Run Money Flow Index Now

   

Money Flow Index

Determine momentum by analyzing Money Flow Index and other technical indicators
All  Next Launch Module
Continue to the analysis of Ero Copper Fundamentals Over Time. Note that the Ero Copper Corp information on this page should be used as a complementary analysis to other Ero Copper'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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

Complementary Tools for Ero Copper Etf analysis

When running Ero Copper Corp price analysis, check to measure Ero Copper'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 Ero Copper is operating at the current time. Most of Ero Copper's value examination focuses on studying past and present price action to predict the probability of Ero Copper's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Ero Copper's price. Additionally, you may evaluate how the addition of Ero Copper to your portfolios can decrease your overall portfolio volatility.
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
The market value of Ero Copper Corp is measured differently than its book value, which is the value of Ero Copper that is recorded on the company's balance sheet. Investors also form their own opinion of Ero Copper's value that differs from its market value or its book value, called intrinsic value, which is Ero Copper'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 Ero Copper's market value can be influenced by many factors that don't directly affect Ero Copper'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 Ero Copper's value and its price as these two are different measures arrived at by different means. Investors typically determine Ero Copper value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Ero Copper'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.
  • 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.