Arrow Financial currently holds 20
M in liabilities with Debt to Equity (D/E) ratio of 0.09, which may suggest Arrow Financial is not taking enough advantage from borrowing. Debt can assist Arrow Financial until it has trouble settling it off, either with new capital or with free cash flow. So, Arrow Financial'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 Arrow Financial sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Arrow to invest in growth at high rates of return. When we think about Arrow Financial's use of debt, we should always consider it together with cash and equity.
Arrow Financial financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Arrow Financial, including all of Arrow Financial's 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 Arrow Financial assets, the company is considered highly leveraged. Understanding the
composition and structure of overall Arrow Financial debt and outstanding corporate bonds gives a good idea of
how risky the capital structure of a business is and if it is worth investing in it. Please read more on our
technical analysis page.
Understanding Arrow Total Liabilities
Arrow Financial liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Arrow Financial has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Arrow Financial balance sheet include debt obligations and money owed to different Arrow Financial vendors, workers, and loan providers. Below is the chart of Arrow short long-term liabilities accounts currently reported on its balance sheet.
You can use Arrow Financial
financial leverage analysis tool to get a better grip on understanding its financial position
How important is Arrow Financial's Liquidity
Arrow Financial
financial leverage refers to using borrowed capital as a funding source to finance Arrow Financial ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Arrow Financial financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Arrow Financial'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 Arrow Financial'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). Please check the
breakdown between Arrow Financial's total debt and its cash.
A Deeper look at Arrow
The small fall in market price for the last few months could raise concerns from sophisticated investors as the firm is trading at a share price of
32.98 on
4,685 in volume. The company directors and management did not add much value to Arrow Financial investors in
December. However, diversifying your holdings with Arrow Financial or similar stocks can still protect your portfolio during high-volatility market scenarios. The stock standard deviation of daily returns for 90 days investing horizon is currently 1.34. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.
| 2020 | 2021 | 2022 | 2023 (projected) |
Net Income | 40.83 M | 49.86 M | 44.87 M | 36.11 M | Gross Profit | 122.54 M | 142.45 M | 163.82 M | 145.22 M |
Will Arrow continue to climb?
Arrow Financial information ratio is up to -0.01. Arrow Financial has relatively low volatility with skewness of 1.51 and kurtosis of 4.24. However, we advise all investors to independently investigate Arrow Financial to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Arrow Financial's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Arrow Financial's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.
Our Final Takeaway
While some firms in the banks—regional industry are either recovering or due for a correction, Arrow Financial may not be performing as strong as the other in terms of long-term growth potentials. While some sophisticated investors may not share our view we believe that the current risk-reward utility is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Arrow Financial.
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Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Arrow Financial. Please refer to our
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