Astra Space Current Financial Leverage

ASTR -  USA Stock  

USD 2.47  0.12  5.11%

Astra Space's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Astra Space's financial risk is the risk to Astra Space 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).
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Astra Space Total Debt is relatively stable at the moment as compared to the past year. Astra Space reported last year Total Debt of 8.88 Million. As of 05/28/2022, Debt Current is likely to grow to about 1.7 M, while Issuance Repayment of Debt Securities is likely to drop (6.6 M).
Given that Astra Space's 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 Astra Space 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 Astra Space to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Astra Space is said to be less leveraged. If creditors hold a majority of Astra Space's assets, the company is said to be highly leveraged.

Astra Space Quarterly Debt to Equity Ratio

0.194

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Given the importance of Astra Space's capital structure, the first step in the capital decision process is for the management of Astra Space to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Astra Space to issue bonds at a reasonable cost.

Astra Space Financial Leverage Rating

Astra Space bond ratings play a critical role in determining how much Astra Space 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 Astra Space's borrowing costs.
Overall Bond Rating
Not Rated
Average S&P Rating
N/A
Piotroski F Score
3  Frail
Beneish M Score

Astra Space Debt to Cash Allocation

As Astra Space follows its natural business cycle, the capital allocation decisions will not magically go away. Astra Space's 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 8.88 M in liabilities with Debt to Equity (D/E) ratio of 0.02, which may suggest the company is not taking enough advantage from borrowing. Astra Space has a current ratio of 8.34, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Astra Space until it has trouble settling it off, either with new capital or with free cash flow. So, Astra Space'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 Astra Space sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Astra to invest in growth at high rates of return. When we think about Astra Space's use of debt, we should always consider it together with cash and equity.

Astra Space Total Assets Over Time

Astra Space Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Astra Space uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

Astra Space Debt Ratio

    
  1.69   
It seems most of the Astra Space's assets are financed through equity. 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 Astra Space's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Astra Space, which in turn will lower the firm's financial flexibility. Like all other financial ratios, an Astra Space debt ratio should be compared their industry average or other competing firms.
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Astra Space Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Astra Space, understanding its historical liability is critical in projecting Astra Space's future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how Astra Space uses its financing power over time.
In order to fund their growth, businesses such as Astra Space widely use Financial Leverage. For most companies, financial capital is raised by issuing debt securities and by selling common stock. The debt and equity that make up Astra Space's capital structure have many risks and return implications. Leverage is an investment strategy of using borrowed money to increase the potential return of an investment. Please note, 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.

Understaning Astra Space Use of Financial Leverage

Astra Space financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Astra Space'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 Astra Space assets, the company is considered highly leveraged. Understanding the composition and structure of overall Astra Space 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.
Last ReportedProjected for 2022
Total Debt8.9 M9.1 M
Debt Current1.7 M1.7 M
Debt Non Current7.2 M10.9 M
Issuance Repayment of Debt Securities-6.4 M-6.6 M
Debt to Equity Ratio 0.14  0.15 
Astra Space, Inc. designs, tests, manufactures, launches, and operates space products and services. The company was incorporated in 2016 and is headquartered in Alameda, California. Astra Space operates under Aerospace Defense classification in the United States and is traded on NASDAQ Exchange. It employs 324 people.
Please read more on our technical analysis page.

Astra Space Investors Sentiment

The influence of Astra Space's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Astra. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.

Astra Space Implied Volatility

    
  67.76  
Astra Space's implied volatility exposes the market's sentiment of Astra Space stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Astra Space's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Astra Space stock will not fluctuate a lot when Astra Space's options are near their expiration.
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 Astra Space 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, Astra Space's short interest history, or implied volatility extrapolated from Astra Space options trading.

Current Sentiment - ASTR

Astra Space Investor Sentiment

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Pair Trading with Astra Space

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Astra Space position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Astra Space will appreciate offsetting losses from the drop in the long position's value.

Astra Space Pair Correlation

Correlation Analysis For Direct Indexing and Tax-loss Harvesting

The ability to find closely correlated positions to Astra Space could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Astra Space when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Astra Space - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Astra Space to buy it.
The correlation of Astra Space is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Astra Space moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Astra Space moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Astra Space can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Please continue to the analysis of Astra Space Fundamentals Over Time. Note that the Astra Space information on this page should be used as a complementary analysis to other Astra Space's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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When running Astra Space price analysis, check to measure Astra Space's 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 Astra Space is operating at the current time. Most of Astra Space's value examination focuses on studying past and present price action to predict the probability of Astra Space's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Astra Space's price. Additionally, you may evaluate how the addition of Astra Space to your portfolios can decrease your overall portfolio volatility.
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Is Astra Space's 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 Astra Space. If investors know Astra 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 Astra Space listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Astra Space is measured differently than its book value, which is the value of Astra that is recorded on the company's balance sheet. Investors also form their own opinion of Astra Space's value that differs from its market value or its book value, called intrinsic value, which is Astra Space's 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 Astra Space's market value can be influenced by many factors that don't directly affect Astra Space's 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 Astra Space's value and its price as these two are different measures arrived at by different means. Investors typically determine Astra Space value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Astra Space's 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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.