Insmed Current Financial Leverage
| INSM Stock | USD 25.10 1.30 5.46% |
Insmed's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Insmed's financial risk is the risk to Insmed 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).
Given that Insmed's 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 Insmed 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 Insmed to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Insmed is said to be less leveraged. If creditors hold a majority of Insmed's assets, the company is said to be highly leveraged.
As of the 30th of November 2023, Total Debt is likely to grow to about 1.4 B. Also, Debt Current is likely to grow to about 8.6 MInsmed |
Insmed Financial Leverage Rating
Insmed Inc bond ratings play a critical role in determining how much Insmed 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 Insmed's borrowing costs.| Piotroski F Score | 2 Frail |
| Beneish M Score | -2.75 Unlikely Manipulator |
Insmed Inc Debt to Cash Allocation
As Insmed Inc follows its natural business cycle, the capital allocation decisions will not magically go away. Insmed'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 1.18 B in liabilities. Insmed Inc has a current ratio of 5.81, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Insmed until it has trouble settling it off, either with new capital or with free cash flow. So, Insmed'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 Insmed Inc sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Insmed to invest in growth at high rates of return. When we think about Insmed's use of debt, we should always consider it together with cash and equity.Insmed Inventories Over Time
Insmed Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Insmed uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Insmed Debt Ratio | 80.04 |
Insmed Inc Historical Liabilities
While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Insmed, understanding its historical liability is critical in projecting Insmed's future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how Insmed uses its financing power over time.
In order to fund their growth, businesses such as Insmed widely use Financial Leverage. For most companies, financial capital is raised by issuing debt securities and by selling common stock. The debt and equity that make up Insmed's capital structure have many risks and return implications. Leverage is an investment strategy of using borrowed money to increase the potential return of an investment. Please note, 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.
Understaning Insmed Use of Financial Leverage
Insmed financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Insmed'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 Insmed assets, the company is considered highly leveraged. Understanding the composition and structure of overall Insmed 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 Insmed'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 Insmed'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 2023 | ||
| Total Debt | 1.3 B | 1.4 B | |
| Debt Current | 8.1 M | 8.6 M | |
| Debt Non Current | 1.3 B | 1.4 B | |
| Issuance Repayment of Debt Securities | 482.2 M | 520.3 M | |
| Long Term Debt to Equity | 13.13 | 14.17 | |
| Debt to Equity Ratio | 17.83 | 19.24 |
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Check out the analysis of Insmed Fundamentals Over Time. You can also try the Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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When running Insmed's price analysis, check to measure Insmed'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 Insmed is operating at the current time. Most of Insmed's value examination focuses on studying past and present price action to predict the probability of Insmed's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Insmed's price. Additionally, you may evaluate how the addition of Insmed to your portfolios can decrease your overall portfolio volatility.
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Is Insmed'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 Insmed. If investors know Insmed 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 Insmed listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (5.29) | Revenue Per Share 2.043 | Quarterly Revenue Growth 0.167 | Return On Assets (0.36) | Return On Equity (14.53) |
The market value of Insmed Inc is measured differently than its book value, which is the value of Insmed that is recorded on the company's balance sheet. Investors also form their own opinion of Insmed's value that differs from its market value or its book value, called intrinsic value, which is Insmed'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 Insmed's market value can be influenced by many factors that don't directly affect Insmed'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 Insmed's value and its price as these two are different measures arrived at by different means. Investors typically determine if Insmed is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Insmed'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.