Kindred Biosciences Current Financial Leverage
Kindred Biosciences holds a debt-to-equity ratio of 0.291. Kindred Biosciences' financial risk is the risk to Kindred Biosciences 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
Kindred Biosciences' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Kindred Biosciences' 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 Kindred Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Kindred Biosciences' stakeholders.
For most companies, including Kindred Biosciences, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Kindred Biosciences 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.
Given that Kindred Biosciences' 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 Kindred Biosciences 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 Kindred Biosciences to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Kindred Biosciences is said to be less leveraged. If creditors hold a majority of Kindred Biosciences' assets, the Company is said to be highly leveraged.
Kindred |
Kindred Biosciences Financial Leverage Rating
Kindred Biosciences bond ratings play a critical role in determining how much Kindred Biosciences 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 Kindred Biosciences' borrowing costs.Kindred Biosciences Debt to Cash Allocation
As Kindred Biosciences follows its natural business cycle, the capital allocation decisions will not magically go away. Kindred Biosciences' 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 has 23.23 M in debt with debt to equity (D/E) ratio of 0.29, which may show that the company is not taking advantage of profits from borrowing. Kindred Biosciences has a current ratio of 6.88, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Debt can assist Kindred Biosciences until it has trouble settling it off, either with new capital or with free cash flow. So, Kindred Biosciences' 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 Kindred Biosciences sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Kindred to invest in growth at high rates of return. When we think about Kindred Biosciences' use of debt, we should always consider it together with cash and equity.Kindred Biosciences 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 Kindred Biosciences' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Kindred Biosciences, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Kindred Biosciences debt ratio should be compared their industry average or other competing firms.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 Kindred Biosciences 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, Kindred Biosciences' short interest history, or implied volatility extrapolated from Kindred Biosciences options trading.
Building efficient market-beating portfolios requires time, education, and a lot of computing power!
The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.
Try AI Portfolio ArchitectCheck out Correlation Analysis to better understand how to build diversified portfolios. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in gross domestic product. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Consideration for investing in Kindred Stock
If you are still planning to invest in Kindred Biosciences check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Kindred Biosciences' history and understand the potential risks before investing.
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| CEOs Directory Screen CEOs from public companies around the world |
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.