Inspired Entertainment Current Financial Leverage

INSE
 Stock
  

USD 12.27  0.05  0.41%   

Inspired Entertainment'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. Inspired Entertainment's financial risk is the risk to Inspired Entertainment 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).
Please see the analysis of Inspired Entertainment Fundamentals Over Time.
  
Inspired Entertainment Debt Current is projected to decrease significantly based on the last few years of reporting. The past year's Debt Current was at 3.78 Million. The current year Issuance Repayment of Debt Securities is expected to grow to about 2.9 M, whereas Debt Non Current is forecasted to decline to about 317.1 M.

Inspired Current Financial Burden

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

Asset vs Debt

Equity vs Debt

For most companies, including Inspired Entertainment, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Inspired Entertainment 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.
non Currrent Assets Other
42.7 M
other Assets
7.1 M
liabilities And Stockholders Equity
331.7 M
total Assets
331.7 M
Operating Margin
0.16
Profit Margin
0.0657
Given the importance of Inspired Entertainment's capital structure, the first step in the capital decision process is for the management of Inspired Entertainment 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 Inspired Entertainment to issue bonds at a reasonable cost.

Inspired Entertainment Financial Leverage Rating

Inspired Entertainment bond ratings play a critical role in determining how much Inspired Entertainment 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 Inspired Entertainment's borrowing costs.
Piotroski F Score
5  Healthy
Beneish M Score

Inspired Entertainment Debt to Cash Allocation

As Inspired Entertainment follows its natural business cycle, the capital allocation decisions will not magically go away. Inspired Entertainment'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 309 M in liabilities with Debt to Equity (D/E) ratio of 0.97, which is about average as compared to similar companies. Inspired Entertainment has a current ratio of 1.73, which is within standard range for the sector. Debt can assist Inspired Entertainment until it has trouble settling it off, either with new capital or with free cash flow. So, Inspired Entertainment'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 Inspired Entertainment sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Inspired to invest in growth at high rates of return. When we think about Inspired Entertainment's use of debt, we should always consider it together with cash and equity.

Inspired Entertainment Inventories Over Time

Inspired Entertainment Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Inspired Entertainment 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.

Inspired Entertainment Debt Ratio

    
  120.68   
It looks as if most of the Inspired Entertainment's assets are financed through 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 Inspired Entertainment's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Inspired Entertainment, which in turn will lower the firm's financial flexibility. Like all other financial ratios, an Inspired Entertainment debt ratio should be compared their industry average or other competing firms.
Share Download
Share Download

Inspired Entertainment Historical Liabilities

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

Inspired Entertainment financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Inspired Entertainment'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 Inspired Entertainment assets, the company is considered highly leveraged. Understanding the composition and structure of overall Inspired Entertainment 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 Debt322.5 M322.6 M
Debt Current3.8 M4.3 M
Debt Non Current318.3 M317.1 M
Issuance Repayment of Debt Securities2.8 M2.9 M
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 Inspired Entertainment without increasing your portfolio risk or giving up the 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 Sync Your Broker Now

   

Sync Your Broker

Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
All  Next Launch Module

Becoming a Better Investor with Macroaxis

Macroaxis puts the power of mathematics on your side. We analyze your portfolios and positions such as Inspired Entertainment using complex mathematical models and algorithms, but make them easy to understand. There is no real person involved in your portfolio analysis. We perform a number of calculations to compute absolute and relative portfolio volatility, correlation between your assets, value at risk, expected return as well as over 100 different fundamental and technical indicators.

Build Optimal Portfolios

Align your risk with return expectations

Fix your portfolio
By capturing your risk tolerance and investment horizon Macroaxis technology of instant portfolio optimization will compute exactly how much risk is acceptable for your desired return expectations
Please see the analysis of Inspired Entertainment Fundamentals Over Time. You can also try Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Complementary Tools for analysis

When running Inspired Entertainment price analysis, check to measure Inspired Entertainment'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 Inspired Entertainment is operating at the current time. Most of Inspired Entertainment's value examination focuses on studying past and present price action to predict the probability of Inspired Entertainment's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Inspired Entertainment's price. Additionally, you may evaluate how the addition of Inspired Entertainment to your portfolios can decrease your overall portfolio volatility.
Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
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
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Is Inspired Entertainment'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 Inspired Entertainment. If investors know Inspired 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 Inspired Entertainment 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 YOY
0.17
Market Capitalization
315.3 M
Quarterly Revenue Growth YOY
(0.035) 
Return On Assets
0.094
The market value of Inspired Entertainment is measured differently than its book value, which is the value of Inspired that is recorded on the company's balance sheet. Investors also form their own opinion of Inspired Entertainment's value that differs from its market value or its book value, called intrinsic value, which is Inspired Entertainment'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 Inspired Entertainment's market value can be influenced by many factors that don't directly affect Inspired Entertainment'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 Inspired Entertainment's value and its price as these two are different measures arrived at by different means. Investors typically determine Inspired Entertainment value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Inspired Entertainment'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.
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.