Clearsign Combustion Current Financial Leverage

CLIR
 Stock
  

USD 1.20  0.06  4.76%   

Clearsign Combustion'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. Clearsign Combustion's financial risk is the risk to Clearsign Combustion 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).
Continue to the analysis of Clearsign Combustion Fundamentals Over Time.
  
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Clearsign Combustion Debt Non Current is relatively stable at the moment as compared to the past year. Clearsign Combustion reported last year Debt Non Current of 350,000. As of 07/06/2022, Issuance Repayment of Debt Securities is likely to grow to about 311.4 K, while Total Debt is likely to drop slightly above 542.7 K.

Clearsign Current Financial Burden

Clearsign Combustion's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Clearsign Combustion's 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 Clearsign Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Clearsign Combustion's stakeholders.

Asset vs Debt

Equity vs Debt

For most companies, including Clearsign Combustion, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Clearsign Combustion 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.
Price Book
5.91
Book Value
0.24
Operating Margin
-31.32
Return On Assets
-0.43
Return On Equity
-0.76
Given that Clearsign Combustion'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 Clearsign Combustion 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 Clearsign Combustion to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Clearsign Combustion is said to be less leveraged. If creditors hold a majority of Clearsign Combustion's assets, the company is said to be highly leveraged.

Clearsign Combustion Quarterly Debt to Equity Ratio

0.143

Given the importance of Clearsign Combustion's capital structure, the first step in the capital decision process is for the management of Clearsign Combustion 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 Clearsign Combustion to issue bonds at a reasonable cost.

Clearsign Combustion Financial Leverage Rating

Clearsign Combustion bond ratings play a critical role in determining how much Clearsign Combustion 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 Clearsign Combustion's borrowing costs.
Piotroski F Score
2  Frail
Beneish M Score

Clearsign Combustion Debt to Cash Allocation

As Clearsign Combustion follows its natural business cycle, the capital allocation decisions will not magically go away. Clearsign Combustion'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 555 K in liabilities with Debt to Equity (D/E) ratio of 0.07, which may suggest the company is not taking enough advantage from borrowing. Clearsign Combustion has a current ratio of 10.76, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Clearsign Combustion until it has trouble settling it off, either with new capital or with free cash flow. So, Clearsign Combustion'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 Clearsign Combustion sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Clearsign to invest in growth at high rates of return. When we think about Clearsign Combustion's use of debt, we should always consider it together with cash and equity.

Clearsign Combustion Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Clearsign Combustion 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.

Clearsign Combustion Debt Ratio

    
  5.53   
It seems most of the Clearsign Combustion'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 Clearsign Combustion's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Clearsign Combustion, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a Clearsign Combustion debt ratio should be compared their industry average or other competing firms.
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Clearsign Combustion Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Clearsign Combustion, understanding its historical liability is critical in projecting Clearsign Combustion'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 Clearsign Combustion uses its financing power over time.
In order to fund their growth, businesses such as Clearsign Combustion 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 Clearsign Combustion'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 Clearsign Combustion Use of Financial Leverage

Clearsign Combustion financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Clearsign Combustion'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 Clearsign Combustion assets, the company is considered highly leveraged. Understanding the composition and structure of overall Clearsign Combustion 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 Debt555 K542.7 K
Debt Current205 K200.8 K
Debt Non Current350 K368.2 K
Issuance Repayment of Debt Securities288.6 K311.4 K
Debt to Equity Ratio 0.13  0.13 
ClearSign Technologies Corporation designs and develops products and technologies to enhance operational performance, energy efficiency, emission reduction, safety, and overall cost-effectiveness of industrial and commercial systems in the United States and the Peoples Republic of China. ClearSign Technologies Corporation was incorporated in 2008 and is headquartered in Tulsa, Oklahoma. Clearsign Combustion operates under Pollution Treatment Controls classification in the United States and is traded on NASDAQ Exchange. It employs 12 people.
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Clearsign Combustion Investors Sentiment

The influence of Clearsign Combustion'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 Clearsign. 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.
Investor biases related to Clearsign Combustion's public news can be used to forecast risks associated with investment in Clearsign. The trend in average sentiment can be used to explain how an investor holding Clearsign can time the market purely based on public headlines and social activities around Clearsign Combustion. Please note that most equiteis that are difficult to arbitrage are affected by market sentiment the most.
Clearsign Combustion's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Clearsign Combustion's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Clearsign Combustion's news discussions. The higher the estimate score, the more favorable is the investor's outlook on Clearsign Combustion.

Clearsign Combustion Implied Volatility

    
  0.0  
Clearsign Combustion's implied volatility exposes the market's sentiment of Clearsign Combustion stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Clearsign Combustion'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 Clearsign Combustion stock will not fluctuate a lot when Clearsign Combustion'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 Clearsign Combustion 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, Clearsign Combustion's short interest history, or implied volatility extrapolated from Clearsign Combustion options trading.

Current Sentiment - CLIR

Clearsign Combustion Investor Sentiment

Most of Macroaxis users are currently bullish on Clearsign Combustion. What is your opinion about investing in Clearsign Combustion? Are you bullish or bearish?
Bullish
Bearish
98% Bullish
2% Bearish

Pair Trading with Clearsign Combustion

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 Clearsign Combustion 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 Clearsign Combustion will appreciate offsetting losses from the drop in the long position's value.

Clearsign Combustion Pair Correlation

Correlation Analysis For Direct Indexing and Tax-loss Harvesting

The ability to find closely correlated positions to Clearsign Combustion could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Clearsign Combustion 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 Clearsign Combustion - 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 Clearsign Combustion to buy it.
The correlation of Clearsign Combustion 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 Clearsign Combustion moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Clearsign Combustion 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 Clearsign Combustion 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
Continue to the analysis of Clearsign Combustion Fundamentals Over Time. Note that the Clearsign Combustion information on this page should be used as a complementary analysis to other Clearsign Combustion'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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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When running Clearsign Combustion price analysis, check to measure Clearsign Combustion'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 Clearsign Combustion is operating at the current time. Most of Clearsign Combustion's value examination focuses on studying past and present price action to predict the probability of Clearsign Combustion's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Clearsign Combustion's price. Additionally, you may evaluate how the addition of Clearsign Combustion to your portfolios can decrease your overall portfolio volatility.
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Is Clearsign Combustion'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 Clearsign Combustion. If investors know Clearsign 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 Clearsign Combustion listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Market Capitalization
45.8 M
Return On Assets
-0.43
Return On Equity
-0.76
The market value of Clearsign Combustion is measured differently than its book value, which is the value of Clearsign that is recorded on the company's balance sheet. Investors also form their own opinion of Clearsign Combustion's value that differs from its market value or its book value, called intrinsic value, which is Clearsign Combustion'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 Clearsign Combustion's market value can be influenced by many factors that don't directly affect Clearsign Combustion'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 Clearsign Combustion's value and its price as these two are different measures arrived at by different means. Investors typically determine Clearsign Combustion value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Clearsign Combustion'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.