International Game Technology IGT Essay

International Game Technology (IGT)Introduction The short boundary and long-term debt for International Game Technology as at thirty-first March 2014 stand at $ 1,426,400 and $ 1,760,500 respectively. The issue forth liabilities for the company sum up to 3,186,900. This information is generated from the company quarterly report. The market value of fair play of IGT is $ 3.98B and the great(p) share is $ 24M. The debt ratio helps a company compare its total debt to total liability and justness. This ratio is used by the company to provoke the frequent notion as to the value of leverage being applied by a company. A lower value implies that the business is less(prenominal) authoritative on borrowed funds. The less the ratio or leverage the business is applying, the stronger is the fair-mindedness position of the company (Tamari, 1978). On the other hand, the bigger the ratio the high the find the business considered to have invested on. Debt to equity ratio is less the equivalent as debt ratio. This is another gearing ratio that compares the business liabilities to its outstanding shareholders equity (Tamari, 1978). The same case with debt ratio, a lower value implies that the business is applying less borrowed fund and the better is its equity stand. Therefore, in both case I consider these ratios too bigger for the IGT confederacy. It implies that the company is highly exposed to risk such as creditors lack of confidence with the company and increase in interest rates. IGT Company should consider nonrecreational off its debt. It can aerodynamic lift capital for stick outing debt by issuing more stock. Among the three companies, IGT Company has the highest debt to equity ratio. The company whitethorn have opted for this coming in golf club to benefit from deductible interest tax and build the credit for the business. This approach will also ensure maintaining completely ownership of the company. The challenges with issuing large amou nt of stock means those shares outstanding of the company become more diluted and the current investors earn smaller ownership fraction with every(prenominal) extra share issued (Wiehle, 2005). On the other hand, Multimedia Games Holdings has the lowest debt to equity ratio. It might have opted for this option in order to enables it investors raise capital without facing debt. This will allow the company owners to concentrate on qualification their outputs more profitable instead of paying back to lenders. Multimedia Games Holdings may have also opted for this approach to allow the company owners and investors to create a long-term association throughout the lifetime of the business. According to Wiehle (2005), the cash liquify for the company will be utilized on investments instead of paying interest and outstanding debts. Moreover, this compare can be termed as a small company if you compare it with the other two companies hence, it might have opted for this method for the fe ar that it will face liquidity issues and fail to pay its outstanding debts (Wiehle, 2005).ReferencesTamari, M. (1978). Financial ratios analysis and prediction. London P. Elek.Wiehle, U. (2005). 100 IFRS financial ratios (1. ed.). Wiesbaden Cometis AG. root system document