LEDS (SemiLEDs Corporation) Ratio of Long-Term Indebtedness to Capital

High barriers to entry due to cleanroom costs and patent protection create a foundation for investment. The long-term financial dependency ratio on the GURU.Markets chart has stabilized at 0.32. Diversified component supplies support brand stability, however, price dumping by Asian players and product commoditization are currently putting significant pressure on the business margins of SemiLEDs Corporation (LEDS).

Asset managers require an objective assessment of an issuer's financial stability. This ratio compares the volume of liabilities with a maturity of over one year to the market value of equity. By analyzing the current long-term debt-to-equity level, an investor determines the degree of debt leverage and the risk of default. This is critical for SemiLEDs Corporation (LEDS), as dumping by Chinese competitors is eroding margins. A decline in profits coupled with a high debt load strips the company of its pricing power.