Aurora Innovation Current Financial Leverage

AUR Stock  USD 2.82  0.17  6.42%   
Aurora Innovation holds a debt-to-equity ratio of 0.062. At this time, Aurora Innovation's Short and Long Term Debt Total is relatively stable compared to the past year. As of 03/29/2024, Long Term Debt To Capitalization is likely to grow to 0.05, while Short Term Debt is likely to drop slightly above 12.9 M. Aurora Innovation's financial risk is the risk to Aurora Innovation 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

Aurora Innovation'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. Aurora Innovation'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 Aurora Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Aurora Innovation's stakeholders.
For most companies, including Aurora Innovation, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Aurora Innovation 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.
Price Book
1.9413
Book Value
1.298
Return On Assets
(0.25)
Return On Equity
(0.42)
At this time, Aurora Innovation's Short and Long Term Debt Total is relatively stable compared to the past year. As of 03/29/2024, Long Term Debt To Capitalization is likely to grow to 0.05, while Short Term Debt is likely to drop slightly above 12.9 M.
  
Check out the analysis of Aurora Innovation Fundamentals Over Time.
To learn how to invest in Aurora Stock, please use our How to Invest in Aurora Innovation guide.

Aurora Innovation Financial Leverage Rating

Aurora Innovation bond ratings play a critical role in determining how much Aurora Innovation 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 Aurora Innovation's borrowing costs.
Piotroski F Score
4  Poor
Beneish M Score

Aurora Innovation Debt to Cash Allocation

As Aurora Innovation follows its natural business cycle, the capital allocation decisions will not magically go away. Aurora Innovation'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 has 122 M in debt with debt to equity (D/E) ratio of 0.06, which may show that the company is not taking advantage of profits from borrowing. Aurora Innovation has a current ratio of 20.61, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Debt can assist Aurora Innovation until it has trouble settling it off, either with new capital or with free cash flow. So, Aurora Innovation'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 Aurora Innovation sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Aurora to invest in growth at high rates of return. When we think about Aurora Innovation's use of debt, we should always consider it together with cash and equity.

Aurora Innovation Total Assets Over Time

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

Aurora Net Debt

Net Debt

(397.95 Million)

Aurora Innovation reported last year Net Debt of (379 Million)

Understaning Aurora Innovation Use of Financial Leverage

Aurora Innovation financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Aurora Innovation'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 Aurora Innovation assets, the company is considered highly leveraged. Understanding the composition and structure of overall Aurora Innovation 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 Aurora Innovation'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 Aurora Innovation'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 Debt-379 M-397.9 M
Short and Long Term Debt Total122 M139.9 M
Short Term Debt15 M12.9 M
Long Term Debt To Capitalization 0.05  0.05 
Total Debt To Capitalization 0.06  0.06 
Debt Equity Ratio 0.06  0.06 
Debt Ratio 0.05  0.09 
Cash Flow To Debt Ratio(4.90)(5.15)
Please read more on our technical analysis page.

Aurora Innovation Investors Sentiment

The influence of Aurora Innovation's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Aurora. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock market does not have solid backing from leading economists and market statisticians.
Investor biases related to Aurora Innovation's public news can be used to forecast risks associated with an investment in Aurora. The trend in average sentiment can be used to explain how an investor holding Aurora can time the market purely based on public headlines and social activities around Aurora Innovation. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
Aurora Innovation's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Aurora Innovation's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Aurora Innovation's news discussions. The higher the estimated score, the more favorable is the investor's outlook on Aurora Innovation.
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 Aurora Innovation 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, Aurora Innovation's short interest history, or implied volatility extrapolated from Aurora Innovation options trading.

Pair Trading with Aurora Innovation

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 Aurora Innovation 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 Aurora Innovation will appreciate offsetting losses from the drop in the long position's value.

Moving against Aurora Stock

  0.81FI Fiserv Inc Symbol ChangePairCorr
  0.78IBM International Business Fiscal Quarter End 31st of March 2024 PairCorr
  0.76NYAX Nayax Financial Report 8th of May 2024 PairCorr
  0.76FIS Fidelity National Financial Report 25th of April 2024 PairCorr
  0.74DTST Data Storage CorpPairCorr
The ability to find closely correlated positions to Aurora Innovation could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Aurora Innovation 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 Aurora Innovation - 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 Aurora Innovation to buy it.
The correlation of Aurora Innovation 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 Aurora Innovation moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Aurora Innovation 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 Aurora Innovation 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.
Pair CorrelationCorrelation Matching
When determining whether Aurora Innovation is a strong investment it is important to analyze Aurora Innovation'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 Aurora Innovation's future performance. For an informed investment choice regarding Aurora Stock, refer to the following important reports:
Check out the analysis of Aurora Innovation Fundamentals Over Time.
To learn how to invest in Aurora Stock, please use our How to Invest in Aurora Innovation guide.
You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.

Complementary Tools for Aurora Stock analysis

When running Aurora Innovation's price analysis, check to measure Aurora Innovation'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 Aurora Innovation is operating at the current time. Most of Aurora Innovation's value examination focuses on studying past and present price action to predict the probability of Aurora Innovation's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Aurora Innovation's price. Additionally, you may evaluate how the addition of Aurora Innovation to your portfolios can decrease your overall portfolio volatility.
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Global Correlations
Find global opportunities by holding instruments from different markets
Is Aurora Innovation'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 Aurora Innovation. If investors know Aurora 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 Aurora Innovation listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share
(0.60)
Revenue Per Share
0.002
Quarterly Revenue Growth
(0.91)
Return On Assets
(0.25)
Return On Equity
(0.42)
The market value of Aurora Innovation is measured differently than its book value, which is the value of Aurora that is recorded on the company's balance sheet. Investors also form their own opinion of Aurora Innovation's value that differs from its market value or its book value, called intrinsic value, which is Aurora Innovation'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 Aurora Innovation's market value can be influenced by many factors that don't directly affect Aurora Innovation'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 Aurora Innovation's value and its price as these two are different measures arrived at by different means. Investors typically determine if Aurora Innovation is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Aurora Innovation'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.