Context Therapeutics Corporate Bonds and Leverage Analysis
CNTX Stock | USD 1.59 0.03 1.92% |
Context Therapeutics holds a debt-to-equity ratio of 0.002. At this time, Context Therapeutics' Short and Long Term Debt is fairly stable compared to the past year. Debt To Equity is likely to rise to 0 in 2024, whereas Long Term Debt is likely to drop slightly above 59 K in 2024. With a high degree of financial leverage come high-interest payments, which usually reduce Context Therapeutics' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Context Therapeutics' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Context Therapeutics' 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 Context Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Context Therapeutics' stakeholders.
For most companies, including Context Therapeutics, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Context Therapeutics, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Context Therapeutics' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 1.3415 | Book Value 0.744 | Return On Assets (0.19) | Return On Equity (0.30) |
Context |
Given the importance of Context Therapeutics' capital structure, the first step in the capital decision process is for the management of Context Therapeutics 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 Context Therapeutics to issue bonds at a reasonable cost.
Context Therapeutics Debt to Cash Allocation
As Context Therapeutics follows its natural business cycle, the capital allocation decisions will not magically go away. Context Therapeutics' 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.
Context Therapeutics currently holds 4.19 M in liabilities with Debt to Equity (D/E) ratio of 0.0, which may suggest the company is not taking enough advantage from borrowing. Context Therapeutics has a current ratio of 14.35, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Context Therapeutics' use of debt, we should always consider it together with its cash and equity.Context Therapeutics Total Assets Over Time
Context Therapeutics Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Context Therapeutics 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.Context Therapeutics Debt Ratio | 0.16 |
Context Therapeutics Corporate Bonds Issued
Context Long Term Debt
Long Term Debt |
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Understaning Context Therapeutics Use of Financial Leverage
Understanding the structure of Context Therapeutics' debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Context Therapeutics' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Last Reported | Projected for Next Year | ||
Long Term Debt | 62.1 K | 59 K | |
Short and Long Term Debt | 6.8 M | 8.5 M | |
Short Term Debt | 126.7 K | 120.3 K | |
Short and Long Term Debt Total | 49.6 K | 47.1 K | |
Net Debt | -14.4 M | -15.2 M | |
Net Debt To EBITDA | 0.58 | 0.55 | |
Interest Debt Per Share | 0.04 | 0.04 | |
Cash Flow To Debt Ratio | (282.90) | (268.76) |
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When running Context Therapeutics' price analysis, check to measure Context Therapeutics' 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 Context Therapeutics is operating at the current time. Most of Context Therapeutics' value examination focuses on studying past and present price action to predict the probability of Context Therapeutics' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Context Therapeutics' price. Additionally, you may evaluate how the addition of Context Therapeutics to your portfolios can decrease your overall portfolio volatility.
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.