This firm currently holds 14.76
M in liabilities with Debt to Equity (D/E) ratio of 0.08, which may suggest Prometheus Biosciences is not taking enough advantage from borrowing. The company has a current ratio of 13.05, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Prometheus Biosciences until it has trouble settling it off, either with new capital or with free cash flow. So, Prometheus 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 Prometheus Biosciences sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Prometheus to invest in growth at high rates of return. When we think about Prometheus Biosciences' use of debt, we should always consider it together with cash and equity.
Prometheus Biosciences financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Prometheus Biosciences, including all of Prometheus Biosciences'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 Prometheus Biosciences assets, the company is considered highly leveraged. Understanding the
composition and structure of overall Prometheus Biosciences 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.
How important is Prometheus Biosciences's Liquidity
Prometheus Biosciences
financial leverage refers to using borrowed capital as a funding source to finance Prometheus Biosciences ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Prometheus Biosciences 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 Prometheus Biosciences' 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 Prometheus Biosciences' 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 Prometheus Biosciences's total debt and its cash.
Is Prometheus Biosciences valued reasonably by the market?
The current price rise of Prometheus Biosciences created some momentum for investors as it was traded today as low as
109.29 and as high as
117.13 per share. The company directors and management may have good odds in positioning the company resources to exploit
market volatility in
January. The stock standard deviation of daily returns for 90 days investing horizon is currently 21.25. The very high volatility is mostly attributed to the latest market swings and not very good earnings reports from some of the Prometheus Biosciences partners.
Asset Breakdown
| Total Assets | 140.72 Million |
| Current Assets | 108.61 Million |
| Assets Non Current | 57.8 Million |
Time to exit Prometheus Biosciences is now
Current variance is at 437.83. Prometheus Biosciences is displaying above-average volatility over the selected time horizon. Investors should scrutinize Prometheus Biosciences independently to ensure intended market timing strategies are aligned with expectations about Prometheus Biosciences volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Prometheus Biosciences' stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Prometheus Biosciences' 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.
The Current Takeaway on Prometheus Biosciences Investment
While some firms under the biotechnology industry are still a bit expensive, Prometheus Biosciences may offer a potential longer-term growth to investors. The inconsistency in the assessment between current Prometheus valuation and our trade advice on Prometheus Biosciences is due to the recent market swings and your selection of investing horizon. 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 Prometheus Biosciences.
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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 Prometheus Biosciences. Please refer to our
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