Cabaletta Bio Current Financial Leverage
| CABA Stock | USD 12.96 0.36 2.70% |
Cabaletta Bio holds a debt-to-equity ratio of -3.7552. At present, Cabaletta Bio's Net Debt To EBITDA is projected to slightly decrease based on the last few years of reporting. The current year's Debt To Equity is expected to grow to 0.04, whereas Net Debt is projected to grow to (178.8 M). Cabaletta Bio's financial risk is the risk to Cabaletta Bio 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).
At present, Cabaletta Bio's Net Debt To EBITDA is projected to slightly decrease based on the last few years of reporting. The current year's Debt To Equity is expected to grow to 0.04, whereas Net Debt is projected to grow to (178.8 M). Cabaletta |
Cabaletta Bio Financial Leverage Rating
Cabaletta Bio bond ratings play a critical role in determining how much Cabaletta Bio 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 Cabaletta Bio's borrowing costs.| Piotroski F Score | 4 Poor |
| Beneish M Score | -5.02 Unlikely Manipulator |
Cabaletta Bio Debt to Cash Allocation
As Cabaletta Bio follows its natural business cycle, the capital allocation decisions will not magically go away. Cabaletta Bio'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 5.02 M in liabilities. Cabaletta Bio has a current ratio of 14.92, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Cabaletta Bio until it has trouble settling it off, either with new capital or with free cash flow. So, Cabaletta Bio'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 Cabaletta Bio sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Cabaletta to invest in growth at high rates of return. When we think about Cabaletta Bio's use of debt, we should always consider it together with cash and equity.Cabaletta Bio Total Assets Over Time
Cabaletta Bio 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 Cabaletta Bio's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Cabaletta Bio, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Cabaletta Bio debt ratio should be compared their industry average or other competing firms.Cabaletta Net Debt
Net Debt |
|
Understaning Cabaletta Bio Use of Financial Leverage
Cabaletta Bio financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Cabaletta Bio'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 Cabaletta Bio assets, the company is considered highly leveraged. Understanding the composition and structure of overall Cabaletta Bio 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 Cabaletta Bio'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 Cabaletta Bio'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 Reported | Projected for Next Year | ||
| Net Debt | -188.2 M | -178.8 M | |
| Short and Long Term Debt Total | 5 M | 4.1 M | |
| Short Term Debt | 3.6 M | 3.2 M | |
| Net Debt To EBITDA | 2.57 | 4.08 | |
| Debt To Equity | 0.02 | 0.04 | |
| Interest Debt Per Share | 0.12 | 0.14 | |
| Debt To Assets | 0.02 | 0.04 | |
| Long Term Debt To Capitalization | 0.01 | 0.01 | |
| Total Debt To Capitalization | 0.02 | 0.04 | |
| Debt Equity Ratio | 0.02 | 0.04 | |
| Debt Ratio | 0.02 | 0.04 | |
| Cash Flow To Debt Ratio | (10.67) | (11.20) |
Check out the analysis of Cabaletta Bio Fundamentals Over Time. For information on how to trade Cabaletta Stock refer to our How to Trade Cabaletta Stock guide.Note that the Cabaletta Bio information on this page should be used as a complementary analysis to other Cabaletta Bio's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Complementary Tools for Cabaletta Stock analysis
When running Cabaletta Bio's price analysis, check to measure Cabaletta Bio'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 Cabaletta Bio is operating at the current time. Most of Cabaletta Bio's value examination focuses on studying past and present price action to predict the probability of Cabaletta Bio's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Cabaletta Bio's price. Additionally, you may evaluate how the addition of Cabaletta Bio to your portfolios can decrease your overall portfolio volatility.
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |
Is Cabaletta Bio'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 Cabaletta Bio. If investors know Cabaletta 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 Cabaletta Bio listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (1.65) | Return On Assets (0.25) | Return On Equity (0.40) |
The market value of Cabaletta Bio is measured differently than its book value, which is the value of Cabaletta that is recorded on the company's balance sheet. Investors also form their own opinion of Cabaletta Bio's value that differs from its market value or its book value, called intrinsic value, which is Cabaletta Bio'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 Cabaletta Bio's market value can be influenced by many factors that don't directly affect Cabaletta Bio'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 Cabaletta Bio's value and its price as these two are different measures arrived at by different means. Investors typically determine if Cabaletta Bio is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Cabaletta Bio'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.