Crown Electrokinetics Current Financial Leverage
| CRKN Stock | USD 0.05 0 2.24% |
Crown Electrokinetics holds a debt-to-equity ratio of 0.799. At this time, Crown Electrokinetics' Net Debt is very stable compared to the past year. As of the 24th of April 2024, Short and Long Term Debt Total is likely to grow to about 4.3 M, while Short Term Debt is likely to drop about 1.7 M. Crown Electrokinetics' financial risk is the risk to Crown Electrokinetics 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
Crown Electrokinetics' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Crown Electrokinetics' 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 Crown Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Crown Electrokinetics' stakeholders.
For most companies, including Crown Electrokinetics, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Crown Electrokinetics 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.
Price Book 0.6003 | Book Value 0.182 | Operating Margin (66.12) | Return On Assets (1.45) | Return On Equity (11.13) |
Given that Crown Electrokinetics' debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Crown Electrokinetics 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 Crown Electrokinetics to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Crown Electrokinetics is said to be less leveraged. If creditors hold a majority of Crown Electrokinetics' assets, the Company is said to be highly leveraged.
At this time, Crown Electrokinetics' Net Debt is very stable compared to the past year. As of the 24th of April 2024, Short and Long Term Debt Total is likely to grow to about 4.3 M, while Short Term Debt is likely to drop about 1.7 M. Crown |
Crown Electrokinetics Financial Leverage Rating
Crown Electrokinetics Corp bond ratings play a critical role in determining how much Crown Electrokinetics 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 Crown Electrokinetics' borrowing costs.| Piotroski F Score | 7 Strong |
| Beneish M Score | -3.47 Unlikely Manipulator |
Crown Electrokinetics Debt to Cash Allocation
As Crown Electrokinetics Corp follows its natural business cycle, the capital allocation decisions will not magically go away. Crown Electrokinetics' 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 429 K in liabilities with Debt to Equity (D/E) ratio of 0.8, which is about average as compared to similar companies. Crown Electrokinetics has a current ratio of 0.68, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist Crown Electrokinetics until it has trouble settling it off, either with new capital or with free cash flow. So, Crown Electrokinetics' 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 Crown Electrokinetics sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Crown to invest in growth at high rates of return. When we think about Crown Electrokinetics' use of debt, we should always consider it together with cash and equity.Crown Electrokinetics Total Assets Over Time
Crown Electrokinetics 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 Crown Electrokinetics' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Crown Electrokinetics, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Crown Electrokinetics debt ratio should be compared their industry average or other competing firms.Crown Net Debt
Net Debt |
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Understaning Crown Electrokinetics Use of Financial Leverage
Crown Electrokinetics financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Crown Electrokinetics'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 Crown Electrokinetics assets, the company is considered highly leveraged. Understanding the composition and structure of overall Crown Electrokinetics 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 Crown Electrokinetics' 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 Crown Electrokinetics' 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 | 3.2 M | 3.4 M | |
| Short and Long Term Debt Total | 4.1 M | 4.3 M | |
| Short Term Debt | 2.6 M | 1.7 M | |
| Short and Long Term Debt | 429 K | 407.6 K | |
| Net Debt To EBITDA | (0.22) | (0.23) | |
| Debt To Equity | 6.12 | 6.42 | |
| Interest Debt Per Share | 0.37 | 0.27 | |
| Debt To Assets | 0.49 | 0.47 | |
| Long Term Debt To Capitalization | 0.65 | 0.58 | |
| Total Debt To Capitalization | 0.78 | 0.82 | |
| Debt Equity Ratio | 6.12 | 6.42 | |
| Debt Ratio | 0.49 | 0.47 | |
| Cash Flow To Debt Ratio | (3.56) | (3.38) |
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 Crown Electrokinetics 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, Crown Electrokinetics' short interest history, or implied volatility extrapolated from Crown Electrokinetics options trading.
Pair Trading with Crown Electrokinetics
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 Crown Electrokinetics 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 Crown Electrokinetics will appreciate offsetting losses from the drop in the long position's value.Moving against Crown Stock
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The ability to find closely correlated positions to Crown Electrokinetics could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Crown Electrokinetics 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 Crown Electrokinetics - 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 Crown Electrokinetics Corp to buy it.
The correlation of Crown Electrokinetics 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 Crown Electrokinetics moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Crown Electrokinetics 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 Crown Electrokinetics 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 Crown Electrokinetics Fundamentals Over Time. 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 Crown Electrokinetics' price analysis, check to measure Crown Electrokinetics' 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 Crown Electrokinetics is operating at the current time. Most of Crown Electrokinetics' value examination focuses on studying past and present price action to predict the probability of Crown Electrokinetics' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Crown Electrokinetics' price. Additionally, you may evaluate how the addition of Crown Electrokinetics to your portfolios can decrease your overall portfolio volatility.
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Is Crown Electrokinetics' 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 Crown Electrokinetics. If investors know Crown 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 Crown Electrokinetics listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (5.46) | Revenue Per Share 0.028 | Quarterly Revenue Growth (1.00) | Return On Assets (1.45) | Return On Equity (11.13) |
The market value of Crown Electrokinetics is measured differently than its book value, which is the value of Crown that is recorded on the company's balance sheet. Investors also form their own opinion of Crown Electrokinetics' value that differs from its market value or its book value, called intrinsic value, which is Crown Electrokinetics' 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 Crown Electrokinetics' market value can be influenced by many factors that don't directly affect Crown Electrokinetics' 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 Crown Electrokinetics' value and its price as these two are different measures arrived at by different means. Investors typically determine if Crown Electrokinetics is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Crown Electrokinetics' 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.