Shares & Derivatives
Raffles Medical & The Hour Glass: 3 Key Metrics to Examine as Interest Rates Rise
By The Fifth Person  •  September 25, 2015
After years of near-zero interest rates, the US Federal Reserve has positioned itself for a rate hike this year. When the Fed raises interest rates, Singapore’s SOR and SIBOR follow suit. Rising interest rates affect all our investments and investors like us need to consider the implications and select only the best companies that can deal with a rising interest rate environment. So how we know if a company is able to survive or even thrive (as weaker competitors get weeded out) in a rising interest rate environment? For me, there are three criteria:

1. Low Debt

Companies with a strong balance sheet have relatively low liabilities and are able to service their debts better. For this, I like to use the debt-to-asset ratio:

Debt-to-Asset Ratio = Total Debt ÷ Total Assets

The debt-to-asset ratio measures the total amount of debt relative to assets. Ideally, the ratio should be 0.5 ...

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By The Fifth Person
The Fifth Person believes in spreading a message that financial literacy and sound investment knowledge can help people around the world achieve financial independence and lead better lives for themselves and their loved ones.
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