No benefit of financial leverage, but still a great peace of mind due to low proportion of debt component in the capital structure of a company.
Sanjeev Bansal
It depends on who your respondents are; their risk appetite, composition of their portfolios, investment strategy, and whether they equate "Low Debt" with "Peace of Mind" or "Low EPS" with "Peace of Mind" and/or "Peace of Mind" with "Low EPS." Context is also critical, sector (GICS), stock (defensive or growth) and business cycle (expansionary vs recessionary).
Good question Sanjeev Bansal but I agree broadly with Kheepe Lawrence Moremi .
Low Debt, High Tax, Low EPS are three easily calculated mathematical ratios. You could use them as a filter to create a subset of stocks for analysis, but you would then have to research the qualitative differences between each company and the sectors in which it operates. Your filter would exclude all banks from your results as they all have high debt.
In any case I would exclude "Low EPS" from your filter as as you would not want to exclude High EPS companies from your results if they otherwise met your criteria!
Dear Nagalingam Sir
Peace of mind, in this context, is feeling in the mind that we are self dependent and the outsiders stake in the company,which is compulsorily to be repaid alongwith interest is not there. Sooner or later,the increased debt component creates troubling environment for the business,very recently ,a similar case was noticed in Cafe Coffee Day in India.I think that's why Reliance in India is planning to reduce its debts to the minimum extent possible.
It’s a good idea. Economics is a science of scarcity. When Peace of Mind becomes scarce ,we can talk about the value and it’s market. Who supply Peace of Mind and who demand it . Methodological view to this idea refers to the philosophy of utility and enjoyment.
"Low Debt, High Tax, Low EPS, but High Peace of Mind" is a good choice for people who are risk averse. However, not everyone is risk averse.
Sanjeev Bansal Athanasios G. Chymis Iman Bastanifar
What is the conclusion to this question?
Kheepe Lawrence Moremi, I don't think that there is a single conclusion. It was posted as a "discussion" and maybe some new insights or consensus were found. We participated or not as we were interested. The post is relatively old now, so I imagine the 'discussion' is over.
Cheers!