Embassy Bancorp Current Financial Leverage
| EMYB Stock | USD 13.44 0.44 3.38% |
Embassy Bancorp holds a debt-to-equity ratio of 0.0561. Embassy Bancorp's financial risk is the risk to Embassy Bancorp 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).
Asset vs Debt
Equity vs Debt
Embassy Bancorp'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. Embassy Bancorp's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the OTC Stock is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Embassy OTC Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Embassy Bancorp's stakeholders.
For most companies, including Embassy Bancorp, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Embassy Bancorp 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.
Given that Embassy Bancorp's debt-to-equity ratio measures a OTC Stock's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Embassy Bancorp is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Embassy Bancorp to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Embassy Bancorp is said to be less leveraged. If creditors hold a majority of Embassy Bancorp's assets, the OTC Stock is said to be highly leveraged.
Embassy |
Embassy Bancorp Financial Leverage Rating
Embassy Bancorp bond ratings play a critical role in determining how much Embassy Bancorp 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 Embassy Bancorp's borrowing costs.Embassy Bancorp Debt to Cash Allocation
As Embassy Bancorp follows its natural business cycle, the capital allocation decisions will not magically go away. Embassy Bancorp'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 14.65 M in liabilities with Debt to Equity (D/E) ratio of 0.06, which may suggest the company is not taking enough advantage from borrowing. Debt can assist Embassy Bancorp until it has trouble settling it off, either with new capital or with free cash flow. So, Embassy Bancorp'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 Embassy Bancorp sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Embassy to invest in growth at high rates of return. When we think about Embassy Bancorp's use of debt, we should always consider it together with cash and equity.Embassy Bancorp Assets Financed by 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 Embassy Bancorp's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Embassy Bancorp, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an Embassy Bancorp debt ratio should be compared their industry average or other competing firms.Understaning Embassy Bancorp Use of Financial Leverage
Embassy Bancorp financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Embassy Bancorp'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 Embassy Bancorp assets, the company is considered highly leveraged. Understanding the composition and structure of overall Embassy Bancorp 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. Financial leverage can amplify the potential profits to Embassy Bancorp's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Embassy Bancorp's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Embassy Bancorp, Inc. operates as the bank holding company for the Embassy Bank for the Lehigh Valley that provides traditional banking and related financial services to individual, business, and government customers in Pennsylvania. Embassy Bancorp, Inc. was founded in 2001 and is headquartered in Bethlehem, Pennsylvania. Embassy Bancorp operates under BanksRegional classification in the United States and is traded on OTC Exchange. It employs 106 people. Please read more on our technical analysis page.
Pair Trading with Embassy Bancorp
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Embassy Bancorp position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Embassy Bancorp will appreciate offsetting losses from the drop in the long position's value.Moving together with Embassy OTC Stock
| 0.8 | VFS | VinFast Auto Financial Report 20th of May 2024 | PairCorr |
| 0.66 | AVAL | Grupo Aval Financial Report 15th of May 2024 | PairCorr |
| 0.78 | TLK | Telkom Indonesia Tbk Financial Report 26th of April 2024 | PairCorr |
Moving against Embassy OTC Stock
| 0.95 | GE | GE Aerospace Buyout Trend | PairCorr |
| 0.91 | XOM | Exxon Mobil Corp Earnings Call This Week | PairCorr |
| 0.86 | WMT | Walmart Financial Report 16th of May 2024 | PairCorr |
| 0.82 | JPM | JPMorgan Chase Financial Report 12th of July 2024 | PairCorr |
| 0.81 | CVX | Chevron Corp Earnings Call This Week | PairCorr |
The ability to find closely correlated positions to Embassy Bancorp could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Embassy Bancorp when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Embassy Bancorp - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Embassy Bancorp to buy it.
The correlation of Embassy Bancorp is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Embassy Bancorp moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Embassy Bancorp moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Embassy Bancorp can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of Embassy Bancorp Fundamentals Over Time. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Complementary Tools for Embassy OTC Stock analysis
When running Embassy Bancorp's price analysis, check to measure Embassy Bancorp'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 Embassy Bancorp is operating at the current time. Most of Embassy Bancorp's value examination focuses on studying past and present price action to predict the probability of Embassy Bancorp's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Embassy Bancorp's price. Additionally, you may evaluate how the addition of Embassy Bancorp to your portfolios can decrease your overall portfolio volatility.
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Stocks Directory Find actively traded stocks across global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |
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.