Immunoprecise Antibodies Current Financial Leverage

IPA -  USA Stock  

USD 5.30  0.15  2.75%

Immunoprecise Antibodies' 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. Immunoprecise Antibodies' financial risk is the risk to Immunoprecise Antibodies 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).
Please see the analysis of Immunoprecise Antibodies Fundamentals Over Time.
  
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Immunoprecise Antibodies Total Debt is projected to increase significantly based on the last few years of reporting. The past year's Total Debt was at 3.98 Million. The current year Debt Current is expected to grow to about 910.8 K, whereas Debt Non Current is forecasted to decline to about 2.3 M.
Given that Immunoprecise Antibodies' 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 Immunoprecise Antibodies 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 Immunoprecise Antibodies to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Immunoprecise Antibodies is said to be less leveraged. If creditors hold a majority of Immunoprecise Antibodies' assets, the company is said to be highly leveraged.

Immunoprecise Antibodies Quarterly Debt to Equity Ratio

0.184

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

Immunoprecise Antibodies Financial Leverage Rating

Immunoprecise Antibodies bond ratings play a critical role in determining how much Immunoprecise Antibodies 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 Immunoprecise Antibodies' borrowing costs.
Overall Bond Rating
Not Rated
Average S&P Rating
N/A
Piotroski F Score
4  Poor
Beneish M Score

Immunoprecise Antibodies Debt to Cash Allocation

As Immunoprecise Antibodies follows its natural business cycle, the capital allocation decisions will not magically go away. Immunoprecise Antibodies' 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 has 2.81 M in debt with debt to equity (D/E) ratio of 0.06, which may show that the company is not taking advantage of profits from borrowing. Immunoprecise Antibodies has a current ratio of 5.57, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Debt can assist Immunoprecise Antibodies until it has trouble settling it off, either with new capital or with free cash flow. So, Immunoprecise Antibodies' 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 Immunoprecise Antibodies sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Immunoprecise to invest in growth at high rates of return. When we think about Immunoprecise Antibodies' use of debt, we should always consider it together with cash and equity.

Immunoprecise Antibodies Total Assets Over Time

Immunoprecise Antibodies Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Immunoprecise Antibodies 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.

Immunoprecise Antibodies Debt Ratio

    
  6.53   
It appears most of the Immunoprecise Antibodies' 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 Immunoprecise Antibodies' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Immunoprecise Antibodies, which in turn will lower the firm's financial flexibility. Like all other financial ratios, an Immunoprecise Antibodies debt ratio should be compared their industry average or other competing firms.
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Immunoprecise Antibodies Historical Liabilities

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

Immunoprecise Antibodies financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Immunoprecise Antibodies'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 Immunoprecise Antibodies assets, the company is considered highly leveraged. Understanding the composition and structure of overall Immunoprecise Antibodies 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 DebtM4.2 M
Debt Current887.4 K910.8 K
Debt Non Current2.8 M2.3 M
Issuance Repayment of Debt Securities-694.8 K-713.1 K
Debt to Equity Ratio 0.16  0.16 
ImmunoPrecise Antibodies Ltd., together with its subsidiaries, engages in antibody production and related services in the United States, Canada, Europe, and internationally. The company offers a range of antibodies, enzymes, enzyme activity assays, arthritis animal products, proteins, deiminated proteins, organoid growth factors, and hybridoma products for research purposes. Its services include custom antigen modeling, design, and manufacturing B cell sorting, screening, and sequencing custom, immune, and naive phage display production and screening transgenic animals and multi-species antibody discovery bi-specific, tri-specific, VHH, and VNAR antibody manufacturing DNA cloning, protein and antibody downstream processing antibody characterization on label-free biosensors and antibody engineering transient and stable cell line generation antibody optimization and humanization hybridoma production with multiplexed, high-throughput screening, and clone-picking and cryopreservation. The company has research collaboration agreements with Pierre Fabre S.A for antibody discovery and Elektrofi, Inc. to explore a high-concentration formulation of COVID-19 antibody cocktail, PolyTope TATX-03. ImmunoPrecise Antibodies Ltd. was incorporated in 1983 and is based in Victoria, Canada.
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Please see the analysis of Immunoprecise Antibodies Fundamentals Over Time. Note that the Immunoprecise Antibodies information on this page should be used as a complementary analysis to other Immunoprecise Antibodies' 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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Is Immunoprecise Antibodies' 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 Immunoprecise Antibodies. If investors know Immunoprecise 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 Immunoprecise Antibodies 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 Immunoprecise Antibodies is measured differently than its book value, which is the value of Immunoprecise that is recorded on the company's balance sheet. Investors also form their own opinion of Immunoprecise Antibodies' value that differs from its market value or its book value, called intrinsic value, which is Immunoprecise Antibodies' 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 Immunoprecise Antibodies' market value can be influenced by many factors that don't directly affect Immunoprecise Antibodies' 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 Immunoprecise Antibodies' value and its price as these two are different measures arrived at by different means. Investors typically determine Immunoprecise Antibodies value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Immunoprecise Antibodies' 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.