Digimarc Debt
| DMRC Stock | USD 4.86 0.19 3.76% |
Digimarc holds a debt-to-equity ratio of 0.062. With a high degree of financial leverage come high-interest payments, which usually reduce Digimarc's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Digimarc'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. Digimarc'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 Digimarc Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Digimarc's stakeholders.
For most companies, including Digimarc, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Digimarc, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Digimarc's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Digimarc'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 Digimarc 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 Digimarc to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Digimarc is said to be less leveraged. If creditors hold a majority of Digimarc's assets, the Company is said to be highly leveraged.
Check out the analysis of Digimarc Financial Statements. Digimarc Bond Ratings
Digimarc financial ratings play a critical role in determining how much Digimarc 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 Digimarc's borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (3.18) | Unlikely Manipulator | View |
Digimarc Debt to Cash Allocation
As Digimarc follows its natural business cycle, the capital allocation decisions will not magically go away. Digimarc'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.
Digimarc currently holds 5.99 M in liabilities with Debt to Equity (D/E) ratio of 0.06, which may suggest the company is not taking enough advantage from borrowing. Digimarc has a current ratio of 6.95, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Digimarc's use of debt, we should always consider it together with its cash and equity.Digimarc 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 Digimarc's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Digimarc, which in turn will lower the firm's financial flexibility.Digimarc Corporate Bonds Issued
Most Digimarc bonds can be classified according to their maturity, which is the date when Digimarc has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Understaning Digimarc Use of Financial Leverage
Digimarc's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Digimarc's total debt position, including all outstanding debt obligations, and compares it with Digimarc's equity. Financial leverage can amplify the potential profits to Digimarc's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Digimarc is unable to cover its debt costs.
Digimarc Corporation provides automatic identification solutions to commercial and government customers in the United States and internationally. Digimarc Corporation was incorporated in 2008 and is based in Beaverton, Oregon. Digimarc Corp operates under Information Technology Services classification in the United States and is traded on NASDAQ Exchange. It employs 228 people. Please read more on our technical analysis page.
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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.When determining whether Digimarc offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Digimarc's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Digimarc Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Digimarc Stock:Check out the analysis of Digimarc Financial Statements. For information on how to trade Digimarc Stock refer to our How to Trade Digimarc Stock guide.You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Will Application Software sector continue expanding? Could Digimarc diversify its offerings? Factors like these will boost the valuation of Digimarc. Projected growth potential of Digimarc fundamentally drives upward valuation adjustments. Accurate valuation requires analyzing both current fundamentals and future growth trajectories. Every Digimarc data point contributes insight, yet successful analysis hinges on identifying the most consequential variables.
Understanding Digimarc requires distinguishing between market price and book value, where the latter reflects Digimarc's accounting equity. The concept of intrinsic value - what Digimarc's is actually worth based on fundamentals - guides informed investors toward better entry and exit points. Seasoned market participants apply comprehensive analytical frameworks to derive fundamental worth and identify mispriced opportunities. Market sentiment, economic cycles, and investor behavior can push Digimarc's price substantially above or below its fundamental value.
It's important to distinguish between Digimarc's intrinsic value and market price, which are calculated using different methodologies. Investment decisions regarding Digimarc should consider multiple factors including financial performance, growth metrics, competitive position, and professional analysis. In contrast, Digimarc's trading price reflects the actual exchange value where willing buyers and sellers reach mutual agreement.
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.