Evogene Debt
| EVGN Stock | ILA 583.60 16.20 2.70% |
Evogene holds a debt-to-equity ratio of 0.031. With a high degree of financial leverage come high-interest payments, which usually reduce Evogene's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Evogene'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. Evogene'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 Evogene Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Evogene's stakeholders.
For most companies, including Evogene, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Evogene, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Evogene'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 Evogene'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 Evogene 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 Evogene to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Evogene is said to be less leveraged. If creditors hold a majority of Evogene's assets, the Company is said to be highly leveraged.
Evogene |
Evogene Debt to Cash Allocation
Evogene has accumulated 2.39 M in total debt with debt to equity ratio (D/E) of 0.03, which may suggest the company is not taking enough advantage from borrowing. Evogene has a current ratio of 12.49, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Evogene until it has trouble settling it off, either with new capital or with free cash flow. So, Evogene'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 Evogene sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Evogene to invest in growth at high rates of return. When we think about Evogene's use of debt, we should always consider it together with cash and equity.Evogene 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 Evogene's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Evogene, which in turn will lower the firm's financial flexibility.Evogene Corporate Bonds Issued
Most Evogene bonds can be classified according to their maturity, which is the date when Evogene 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 Evogene Use of Financial Leverage
Evogene's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Evogene's total debt position, including all outstanding debt obligations, and compares it with Evogene's equity. Financial leverage can amplify the potential profits to Evogene's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Evogene is unable to cover its debt costs.
Evogene Ltd., together with its subsidiaries, operates as a computational biology company. Evogene Ltd. was founded in 1999 and is headquartered in Rehovot, Israel. EVOGENE operates under Biotechnology classification in Israel and is traded on Tel Aviv Stock Exchange. It employs 131 people. Please read more on our technical analysis page.
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When determining whether Evogene offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Evogene'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 Evogene Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Evogene Stock:Check out the analysis of Evogene Fundamentals Over Time. For information on how to trade Evogene Stock refer to our How to Trade Evogene Stock guide.You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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.