Equillium Current Financial Leverage
| EQ Stock | USD 1.79 0.06 3.24% |
Equillium holds a debt-to-equity ratio of 0.291. At this time, Equillium's Long Term Debt is relatively stable compared to the past year. As of 04/19/2024, Debt To Equity is likely to grow to 0.04, while Long Term Debt Total is likely to drop slightly above 9.6 M. Equillium's financial risk is the risk to Equillium 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
Equillium'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. Equillium'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 Equillium Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Equillium's stakeholders.
For most companies, including Equillium, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Equillium 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 2.9518 | Book Value 0.64 | Operating Margin (0.35) | Profit Margin (0.37) | Return On Assets (0.14) |
Equillium |
Equillium Financial Leverage Rating
Equillium bond ratings play a critical role in determining how much Equillium 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 Equillium's borrowing costs.| Piotroski F Score |
| Beneish M Score | -2.42 Unlikely Manipulator |
Equillium Debt to Cash Allocation
As Equillium follows its natural business cycle, the capital allocation decisions will not magically go away. Equillium'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 reports 824 K of total liabilities with total debt to equity ratio (D/E) of 0.29, which may suggest the company is not taking enough advantage from financial leverage. Equillium has a current ratio of 3.9, indicating that it is in good position to pay out its debt commitments in time. Debt can assist Equillium until it has trouble settling it off, either with new capital or with free cash flow. So, Equillium'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 Equillium sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Equillium to invest in growth at high rates of return. When we think about Equillium's use of debt, we should always consider it together with cash and equity.Equillium Total Assets Over Time
Equillium 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 Equillium's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Equillium, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an Equillium debt ratio should be compared their industry average or other competing firms.Equillium Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Equillium Use of Financial Leverage
Equillium financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Equillium'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 Equillium assets, the company is considered highly leveraged. Understanding the composition and structure of overall Equillium 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 Equillium'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 Equillium'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 | ||
| Short and Long Term Debt Total | 824 K | 782.8 K | |
| Net Debt | -22.4 M | -23.5 M | |
| Long Term Debt | 3.7 M | 7 M | |
| Long Term Debt Total | 10.1 M | 9.6 M | |
| Short and Long Term Debt | 5.1 M | 3.4 M | |
| Short Term Debt | 440 K | 418 K | |
| Net Debt To EBITDA | 1.56 | 1.29 | |
| Debt To Equity | 0.04 | 0.04 | |
| Interest Debt Per Share | 0.04 | 0.04 | |
| Debt To Assets | 0.02 | 0.02 | |
| Long Term Debt To Capitalization | 0.02 | 0.02 | |
| Total Debt To Capitalization | 0.04 | 0.03 | |
| Debt Equity Ratio | 0.04 | 0.04 | |
| Debt Ratio | 0.02 | 0.02 | |
| Cash Flow To Debt Ratio | (26.44) | (25.11) |
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 Equillium 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, Equillium's short interest history, or implied volatility extrapolated from Equillium options trading.
Pair Trading with Equillium
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 Equillium 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 Equillium will appreciate offsetting losses from the drop in the long position's value.Moving together with Equillium Stock
| 0.67 | EOLS | Evolus Inc Financial Report 14th of May 2024 | PairCorr |
Moving against Equillium Stock
| 0.54 | LPTX | Leap Therapeutics Financial Report 20th of May 2024 | PairCorr |
The ability to find closely correlated positions to Equillium could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Equillium 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 Equillium - 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 Equillium to buy it.
The correlation of Equillium 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 Equillium moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Equillium 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 Equillium 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 Equillium Fundamentals Over Time. To learn how to invest in Equillium Stock, please use our How to Invest in Equillium guide.You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Complementary Tools for Equillium Stock analysis
When running Equillium's price analysis, check to measure Equillium'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 Equillium is operating at the current time. Most of Equillium's value examination focuses on studying past and present price action to predict the probability of Equillium's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Equillium's price. Additionally, you may evaluate how the addition of Equillium to your portfolios can decrease your overall portfolio volatility.
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Is Equillium'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 Equillium. If investors know Equillium 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 Equillium listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (0.38) | Revenue Per Share 1.039 | Quarterly Revenue Growth (0.42) | Return On Assets (0.14) | Return On Equity (0.49) |
The market value of Equillium is measured differently than its book value, which is the value of Equillium that is recorded on the company's balance sheet. Investors also form their own opinion of Equillium's value that differs from its market value or its book value, called intrinsic value, which is Equillium'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 Equillium's market value can be influenced by many factors that don't directly affect Equillium'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 Equillium's value and its price as these two are different measures arrived at by different means. Investors typically determine if Equillium is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Equillium'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.