MannKind Corp Current Financial Leverage

MNKD Stock  USD 4.63  0.28  5.70%   
MannKind Corp has over 382.38 Million in debt which may indicate that it relies heavily on debt financing. At present, MannKind Corp's Long Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt Total is expected to grow to about 272.2 M, whereas Short and Long Term Debt Total is forecasted to decline to about 240.2 M. MannKind Corp's financial risk is the risk to MannKind Corp 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

MannKind Corp'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. MannKind Corp's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps MannKind Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect MannKind Corp's stakeholders.
For most companies, including MannKind Corp, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running MannKind Corp 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.
Book Value
(0.91)
Operating Margin
0.1819
Profit Margin
(0.06)
Return On Assets
0.0172
At present, MannKind Corp's Long Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt Total is expected to grow to about 272.2 M, whereas Short and Long Term Debt Total is forecasted to decline to about 240.2 M.
  
Check out the analysis of MannKind Corp Fundamentals Over Time.
For information on how to trade MannKind Stock refer to our How to Trade MannKind Stock guide.

MannKind Corp Financial Leverage Rating

MannKind Corp bond ratings play a critical role in determining how much MannKind Corp 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 MannKind Corp's borrowing costs.
Piotroski F Score
3  Frail
Beneish M Score

MannKind Corp Debt to Cash Allocation

As MannKind Corp follows its natural business cycle, the capital allocation decisions will not magically go away. MannKind Corp'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 382.38 M in liabilities with Debt to Equity (D/E) ratio of 9.93, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. MannKind Corp has a current ratio of 3.19, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist MannKind Corp until it has trouble settling it off, either with new capital or with free cash flow. So, MannKind Corp'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 MannKind Corp sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for MannKind to invest in growth at high rates of return. When we think about MannKind Corp's use of debt, we should always consider it together with cash and equity.

MannKind Corp Total Assets Over Time

MannKind Corp 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 MannKind Corp's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of MannKind Corp, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a MannKind Corp debt ratio should be compared their industry average or other competing firms.

MannKind Net Debt

Net Debt

96.36 Million

At present, MannKind Corp's Net Debt is projected to increase significantly based on the last few years of reporting.

Understaning MannKind Corp Use of Financial Leverage

MannKind Corp financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures MannKind Corp'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 MannKind Corp assets, the company is considered highly leveraged. Understanding the composition and structure of overall MannKind Corp 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 MannKind Corp'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 MannKind Corp'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).
Last ReportedProjected for 2024
Net Debt143.9 M96.4 M
Short Term Debt32 M40.7 M
Short and Long Term Debt Total382.4 M240.2 M
Long Term Debt248.7 M261.1 M
Long Term Debt Total259.2 M272.2 M
Short and Long Term Debt20 M39.6 M
Long Term Debt To Capitalization 42.14  44.25 
Total Debt To Capitalization 7.48  7.86 
Debt Equity Ratio(1.15)(1.21)
Debt Ratio 0.60  0.86 
Cash Flow To Debt Ratio 0.12  0.13 
Please read more on our technical analysis page.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards MannKind Corp in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, MannKind Corp's short interest history, or implied volatility extrapolated from MannKind Corp options trading.

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When determining whether MannKind Corp is a strong investment it is important to analyze MannKind Corp's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact MannKind Corp's future performance. For an informed investment choice regarding MannKind Stock, refer to the following important reports:
Check out the analysis of MannKind Corp Fundamentals Over Time.
For information on how to trade MannKind Stock refer to our How to Trade MannKind Stock guide.
You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.

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When running MannKind Corp's price analysis, check to measure MannKind Corp'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 MannKind Corp is operating at the current time. Most of MannKind Corp's value examination focuses on studying past and present price action to predict the probability of MannKind Corp's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move MannKind Corp's price. Additionally, you may evaluate how the addition of MannKind Corp to your portfolios can decrease your overall portfolio volatility.
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Is MannKind Corp's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of MannKind Corp. If investors know MannKind will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about MannKind Corp listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share
(0.04)
Revenue Per Share
0.745
Quarterly Revenue Growth
0.622
Return On Assets
0.0172
The market value of MannKind Corp is measured differently than its book value, which is the value of MannKind that is recorded on the company's balance sheet. Investors also form their own opinion of MannKind Corp's value that differs from its market value or its book value, called intrinsic value, which is MannKind Corp's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because MannKind Corp's market value can be influenced by many factors that don't directly affect MannKind Corp's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between MannKind Corp's value and its price as these two are different measures arrived at by different means. Investors typically determine if MannKind Corp is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, MannKind Corp's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.