Enservco Debt
| ENSVDelisted Stock | USD 0.05 0.01 9.33% |
Enservco holds a debt-to-equity ratio of 1.368. . Enservco's financial risk is the risk to Enservco stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Enservco'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. Enservco's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the OTC Stock is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Enservco OTC Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Enservco's stakeholders.
For most companies, including Enservco, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Enservco Co, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Enservco'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 Enservco's debt-to-equity ratio measures a OTC Stock's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Enservco 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 Enservco to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Enservco is said to be less leveraged. If creditors hold a majority of Enservco's assets, the OTC Stock is said to be highly leveraged.
Enservco |
Enservco Debt to Cash Allocation
Many companies such as Enservco, 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.
Enservco Co currently holds 9.68 M in liabilities with Debt to Equity (D/E) ratio of 1.37, which is about average as compared to similar companies. Enservco has a current ratio of 0.81, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist Enservco until it has trouble settling it off, either with new capital or with free cash flow. So, Enservco's 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 Enservco sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Enservco to invest in growth at high rates of return. When we think about Enservco's use of debt, we should always consider it together with cash and equity.Enservco 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 Enservco's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Enservco, which in turn will lower the firm's financial flexibility.Enservco Corporate Bonds Issued
Understaning Enservco Use of Financial Leverage
Understanding the structure of Enservco's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Enservco's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Enservco Corporation, through its subsidiaries, provides well enhancement and fluid management services to the onshore oil and natural gas industry in the United States. Enservco Corporation was incorporated in 1980 and is headquartered in Longmont, Colorado. Enservco Corpporation operates under Oil Gas Equipment Services classification in the United States and is traded on AMEX Exchange. It employs 81 people. Please read more on our technical analysis page.
Thematic Opportunities
Explore Investment Opportunities
Check out the analysis of Enservco Fundamentals Over Time. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Consideration for investing in Enservco OTC Stock
If you are still planning to invest in Enservco 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 Enservco's history and understand the potential risks before investing.
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |
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.