Aridis Pharmaceuticals Corporate Bonds and Leverage Analysis
| ARDSDelisted Stock | USD 0.27 0.02 8.00% |
Aridis Pharmaceuticals holds a debt-to-equity ratio of -0.1833. . Aridis Pharmaceuticals' financial risk is the risk to Aridis Pharmaceuticals stockholders that is caused by an increase in debt.
Aridis |
Given the importance of Aridis Pharmaceuticals' capital structure, the first step in the capital decision process is for the management of Aridis Pharmaceuticals 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 Aridis Pharmaceuticals to issue bonds at a reasonable cost.
Aridis Pharmaceuticals Debt to Cash Allocation
Many companies such as Aridis Pharmaceuticals, 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.
Aridis Pharmaceuticals currently holds 6.13 M in liabilities. Aridis Pharmaceuticals has a current ratio of 0.4, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist Aridis Pharmaceuticals until it has trouble settling it off, either with new capital or with free cash flow. So, Aridis Pharmaceuticals' 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 Aridis Pharmaceuticals sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Aridis to invest in growth at high rates of return. When we think about Aridis Pharmaceuticals' use of debt, we should always consider it together with cash and equity.Aridis Pharmaceuticals Assets Financed by Debt
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 Aridis Pharmaceuticals' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Aridis Pharmaceuticals, which in turn will lower the firm's financial flexibility.Aridis Pharmaceuticals Corporate Bonds Issued
Understaning Aridis Pharmaceuticals Use of Financial Leverage
Aridis Pharmaceuticals' financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Aridis Pharmaceuticals' current equity. If creditors own a majority of Aridis Pharmaceuticals' assets, the company is considered highly leveraged. Understanding the composition and structure of Aridis Pharmaceuticals' outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Aridis Pharmaceuticals, Inc., a late-stage biopharmaceutical company, focuses on the discovery and development of targeted immunotherapy using fully human monoclonal antibodies to treat life-threatening infections. Aridis Pharmaceuticals, Inc. was founded in 2003 and is headquartered in Los Gatos, California. Aridis Pharmaceuticals operates under Biotechnology classification in the United States and is traded on NASDAQ Exchange. It employs 34 people. Please read more on our technical analysis page.
Thematic Opportunities
Explore Investment Opportunities
Check out Trending Equities to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in unemployment. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Consideration for investing in Aridis Pink Sheet
If you are still planning to invest in Aridis Pharmaceuticals check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Aridis Pharmaceuticals' history and understand the potential risks before investing.
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |
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.