The reason this may be of interest is this could be a possibility for companies that still have a purpose, but are falling and slowing due to the current market climate. Private equity firms are looking to build portfolios and make money for their investors so the interests should be aligned.
How important is Staples's Liquidity
Staples
financial leverage refers to using borrowed capital as a funding source to finance Staples ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Staples 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 Staples' 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 Staples' 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 Staples's total debt and its cash.
An Additional Perspective On Staples
However, the online space is still where the game is being played and will continue to be played for the foreseeable future. Staples will need to boost their online presence and offer more services that businesses can take advantage of. It is not enough to sell office products and expect people to enter their stores.
Their main competition is Office Max and they are in the same boat, because right now the market is in consolidation mode and there may only be room one. So with the recent news a private equity firm interested in Staples bringing welcomed relief, this still may not save the company for the long term. Remember they still have to perform into the future so there will still need to be changes in how the company operates.
The stock has jumped on recent news and rightly so, but you still have to dig into the fundamentals and see if it aligns with what you believe. I wouldn’t go as far as to call this a dead cat bounce, but the jump in price may only be a short term movement. Be sure to jump into the numbers and look at the chart, taking in as much information as you can. Beyond that, watch the analysts are saying but do not read too far into it, just scoop off the important information off the top and research it yourself.
For current investors, this is the saving grace you may have been looking for and as a potential investor, this could be the breath of life the company’s stock needed. If you still have questions or concerns, be sure to consult an investing professional and they can help to point you in the right direction. Staples continues to stand the test of time but time may have the upper hand as the retail market continues to shift and consolidate, evident with the recent purchase by Amazon.
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Nathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States.
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 Nathan Young do not own shares of Staples. Please refer to our
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