Calavo Growers Debt
| CVGW Stock | USD 23.34 0.32 1.35% |
Calavo Growers holds a debt-to-equity ratio of 0.406. . Calavo Growers' financial risk is the risk to Calavo Growers stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Calavo Growers' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Calavo Growers' 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 Calavo Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Calavo Growers' stakeholders.
For most companies, including Calavo Growers, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Calavo Growers, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Calavo Growers' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Calavo Growers' 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 Calavo Growers 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 Calavo Growers to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Calavo Growers is said to be less leveraged. If creditors hold a majority of Calavo Growers' assets, the Company is said to be highly leveraged.
Calavo |
Calavo Growers Bond Ratings
Calavo Growers financial ratings play a critical role in determining how much Calavo Growers 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 Calavo Growers' borrowing costs.| Piotroski F Score | 5 | Healthy | View |
| Beneish M Score | (2.06) | Possible Manipulator | View |
Calavo Growers Debt to Cash Allocation
Many companies such as Calavo Growers, 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.
Calavo Growers currently holds 8.44 M in liabilities with Debt to Equity (D/E) ratio of 0.41, which is about average as compared to similar companies. Calavo Growers has a current ratio of 1.23, suggesting that it is in a questionable position to pay out its financial obligations when due. Note, when we think about Calavo Growers' use of debt, we should always consider it together with its cash and equity.Calavo Growers 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 Calavo Growers' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Calavo Growers, which in turn will lower the firm's financial flexibility.Calavo Growers Corporate Bonds Issued
Understaning Calavo Growers Use of Financial Leverage
Understanding the structure of Calavo Growers' debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Calavo Growers' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Calavo Growers, Inc. markets and distributes avocados, prepared avocados, and other perishable foods to retail grocery and foodservice customers, club stores, mass merchandisers, food distributors, and wholesale customers worldwide. Calavo Growers, Inc. was founded in 1924 and is headquartered in Santa Paula, California. Calavo Growers operates under Food Distribution classification in the United States and is traded on NASDAQ Exchange. It employs 3676 people. Please read more on our technical analysis page.
Also Currently Popular
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.Additional Tools for Calavo Stock Analysis
When running Calavo Growers' price analysis, check to measure Calavo Growers' 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 Calavo Growers is operating at the current time. Most of Calavo Growers' value examination focuses on studying past and present price action to predict the probability of Calavo Growers' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Calavo Growers' price. Additionally, you may evaluate how the addition of Calavo Growers 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.