EnSync Debt
| ESNCDelisted Stock | USD 0.0001 0.00 0.00% |
EnSync Inc holds a debt-to-equity ratio of 0.226. With a high degree of financial leverage come high-interest payments, which usually reduce EnSync's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
EnSync'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. EnSync'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 EnSync Pink Sheet's retail investors understand whether an upcoming fall or rise in the market will negatively affect EnSync's stakeholders.
For most companies, including EnSync, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for EnSync Inc, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, EnSync'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 EnSync'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 EnSync 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 EnSync to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, EnSync is said to be less leveraged. If creditors hold a majority of EnSync's assets, the Company is said to be highly leveraged.
EnSync |
EnSync Inc Debt to Cash Allocation
EnSync Inc currently holds 331.83 K in liabilities with Debt to Equity (D/E) ratio of 0.23, which may suggest the company is not taking enough advantage from borrowing. EnSync Inc has a current ratio of 2.65, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist EnSync until it has trouble settling it off, either with new capital or with free cash flow. So, EnSync'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 EnSync Inc sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for EnSync to invest in growth at high rates of return. When we think about EnSync's use of debt, we should always consider it together with cash and equity.EnSync 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 EnSync's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of EnSync, which in turn will lower the firm's financial flexibility.EnSync Corporate Bonds Issued
Most EnSync bonds can be classified according to their maturity, which is the date when EnSync Inc 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 EnSync Use of Financial Leverage
EnSync's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures EnSync's total debt position, including all outstanding debt obligations, and compares it with EnSync's equity. Financial leverage can amplify the potential profits to EnSync's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if EnSync is unable to cover its debt costs.
EnSync, Inc., together with its subsidiaries, develops, licenses, and manufactures energy management systems solutions for the residential and commercial energy systems, and independent utility energy systems markets in the United States and internationally. EnSync, Inc. was founded in 1986 and is headquartered in Menomonee Falls, Wisconsin. ENSYNC INC operates under Specialty Industrial Machinery classification in the United States and is traded on OTC Exchange. It employs 64 people. Please read more on our technical analysis page.
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Other Consideration for investing in EnSync Pink Sheet
If you are still planning to invest in EnSync Inc 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 EnSync's history and understand the potential risks before investing.
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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.