Iterum Therapeutics Current Debt
| ITRM Stock | USD 1.59 0.04 2.58% |
Iterum Therapeutics PLC holds a debt-to-equity ratio of 0.583. At this time, Iterum Therapeutics' Net Debt is very stable compared to the past year. As of the 8th of May 2024, Short and Long Term Debt Total is likely to grow to about 23.7 M, while Short and Long Term Debt is likely to drop about 1.8 M. Iterum Therapeutics' financial risk is the risk to Iterum Therapeutics stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Iterum Therapeutics' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Iterum Therapeutics' 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 Iterum Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Iterum Therapeutics' stakeholders.
For most companies, including Iterum Therapeutics, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Iterum Therapeutics PLC 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 6.0287 | Book Value (0.47) | Return On Assets (0.64) | Return On Equity (3.55) |
Iterum |
Iterum Therapeutics Financial Leverage Rating
Iterum Therapeutics PLC bond ratings play a critical role in determining how much Iterum Therapeutics 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 Iterum Therapeutics' borrowing costs.Iterum Therapeutics PLC Debt to Cash Allocation
As Iterum Therapeutics PLC follows its natural business cycle, the capital allocation decisions will not magically go away. Iterum Therapeutics' 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 19.51 M in liabilities with Debt to Equity (D/E) ratio of 0.58, which is about average as compared to similar companies. Iterum Therapeutics PLC has a current ratio of 9.28, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Iterum Therapeutics until it has trouble settling it off, either with new capital or with free cash flow. So, Iterum Therapeutics' 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 Iterum Therapeutics PLC sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Iterum to invest in growth at high rates of return. When we think about Iterum Therapeutics' use of debt, we should always consider it together with cash and equity.Iterum Therapeutics Total Assets Over Time
Iterum Therapeutics 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 Iterum Therapeutics' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Iterum Therapeutics, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an Iterum Therapeutics debt ratio should be compared their industry average or other competing firms.Iterum Net Debt
Net Debt |
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Understaning Iterum Therapeutics Use of Financial Leverage
Iterum Therapeutics financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Iterum Therapeutics'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 Iterum Therapeutics assets, the company is considered highly leveraged. Understanding the composition and structure of overall Iterum Therapeutics 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 Iterum Therapeutics' 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 Iterum Therapeutics' 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 | 13.4 M | 14.1 M | |
| Short and Long Term Debt Total | 19.5 M | 23.7 M | |
| Long Term Debt | 19 M | 21.2 M | |
| Long Term Debt Total | 25.8 M | 15.8 M | |
| Short and Long Term Debt | 1.9 M | 1.8 M | |
| Short Term Debt | 365 K | 346.8 K | |
| Net Debt To EBITDA | (0.29) | (0.28) | |
| Debt To Equity | (3.02) | (2.87) | |
| Interest Debt Per Share | 1.38 | 1.31 | |
| Debt To Assets | 0.74 | 0.46 | |
| Long Term Debt To Capitalization | 1.51 | 1.59 | |
| Total Debt To Capitalization | 1.50 | 1.57 | |
| Debt Equity Ratio | (3.02) | (2.87) | |
| Debt Ratio | 0.74 | 0.46 | |
| Cash Flow To Debt Ratio | (2.04) | (2.14) |
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When running Iterum Therapeutics' price analysis, check to measure Iterum Therapeutics' 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 Iterum Therapeutics is operating at the current time. Most of Iterum Therapeutics' value examination focuses on studying past and present price action to predict the probability of Iterum Therapeutics' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Iterum Therapeutics' price. Additionally, you may evaluate how the addition of Iterum Therapeutics to your portfolios can decrease your overall portfolio volatility.
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Is Iterum Therapeutics' 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 Iterum Therapeutics. If investors know Iterum 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 Iterum Therapeutics listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (2.96) | Quarterly Revenue Growth (1.00) | Return On Assets (0.64) | Return On Equity (3.55) |
The market value of Iterum Therapeutics PLC is measured differently than its book value, which is the value of Iterum that is recorded on the company's balance sheet. Investors also form their own opinion of Iterum Therapeutics' value that differs from its market value or its book value, called intrinsic value, which is Iterum Therapeutics' 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 Iterum Therapeutics' market value can be influenced by many factors that don't directly affect Iterum Therapeutics' 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 Iterum Therapeutics' value and its price as these two are different measures arrived at by different means. Investors typically determine if Iterum Therapeutics is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Iterum Therapeutics' 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.