Fennec Pharmaceuticals Debt
| FENC Stock | USD 5.54 0.09 1.60% |
Fennec Pharmaceuticals holds a debt-to-equity ratio of 0.584. At present, Fennec Pharmaceuticals' Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt is expected to grow to about 37.3 M, whereas Short Term Debt is forecasted to decline to about 18 K. With a high degree of financial leverage come high-interest payments, which usually reduce Fennec Pharmaceuticals' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Fennec Pharmaceuticals' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Fennec Pharmaceuticals' 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 Fennec Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Fennec Pharmaceuticals' stakeholders.
For most companies, including Fennec Pharmaceuticals, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Fennec Pharmaceuticals, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Fennec Pharmaceuticals' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Fennec Pharmaceuticals' 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 Fennec Pharmaceuticals 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 Fennec Pharmaceuticals to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Fennec Pharmaceuticals is said to be less leveraged. If creditors hold a majority of Fennec Pharmaceuticals' assets, the Company is said to be highly leveraged.
At present, Fennec Pharmaceuticals' Non Current Liabilities Total is projected to increase significantly based on the last few years of reporting. The current year's Change To Liabilities is expected to grow to about 1.9 M, whereas Liabilities And Stockholders Equity is forecasted to decline to about 16.1 M. Fennec |
Fennec Pharmaceuticals Bond Ratings
Fennec Pharmaceuticals financial ratings play a critical role in determining how much Fennec Pharmaceuticals 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 Fennec Pharmaceuticals' borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (1,846) | Unlikely Manipulator | View |
Fennec Pharmaceuticals Debt to Cash Allocation
As Fennec Pharmaceuticals follows its natural business cycle, the capital allocation decisions will not magically go away. Fennec Pharmaceuticals' 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.
Fennec Pharmaceuticals currently holds 30.95 M in liabilities with Debt to Equity (D/E) ratio of 0.58, which is about average as compared to similar companies. Fennec Pharmaceuticals has a current ratio of 5.02, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Fennec Pharmaceuticals' use of debt, we should always consider it together with its cash and equity.Fennec Pharmaceuticals Total Assets Over Time
Fennec Pharmaceuticals Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Fennec Pharmaceuticals uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Fennec Pharmaceuticals Debt Ratio | 109.0 |
Fennec Pharmaceuticals Corporate Bonds Issued
Most Fennec bonds can be classified according to their maturity, which is the date when Fennec Pharmaceuticals 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.
Fennec Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Fennec Pharmaceuticals Use of Financial Leverage
Fennec Pharmaceuticals' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Fennec Pharmaceuticals' total debt position, including all outstanding debt obligations, and compares it with Fennec Pharmaceuticals' equity. Financial leverage can amplify the potential profits to Fennec Pharmaceuticals' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Fennec Pharmaceuticals is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 35.6 M | 37.4 M | |
| Net Debt | 15.9 M | 16.7 M | |
| Long Term Debt | 35.6 M | 37.3 M | |
| Short and Long Term Debt | 192.1 K | 195.7 K | |
| Short Term Debt | 18.9 K | 18 K | |
| Long Term Debt Total | 4.5 M | 4 M | |
| Net Debt To EBITDA | (1.29) | (1.22) | |
| Debt To Equity | (3.06) | (3.22) | |
| Interest Debt Per Share | 1.16 | 1.22 | |
| Debt To Assets | 1.04 | 1.09 | |
| Long Term Debt To Capitalization | 1.44 | 1.51 | |
| Total Debt To Capitalization | 1.44 | 1.51 | |
| Debt Equity Ratio | (3.06) | (3.22) | |
| Debt Ratio | 1.04 | 1.09 | |
| Cash Flow To Debt Ratio | (0.50) | (0.52) |
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Check out the analysis of Fennec Pharmaceuticals Fundamentals Over Time. For information on how to trade Fennec Stock refer to our How to Trade Fennec Stock guide.You can also try the CEOs Directory module to screen CEOs from public companies around the world.
Is Biotechnology space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Fennec Pharmaceuticals. If investors know Fennec will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Fennec Pharmaceuticals listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (0.04) | Revenue Per Share | Quarterly Revenue Growth 0.07 | Return On Assets | Return On Equity |
The market value of Fennec Pharmaceuticals is measured differently than its book value, which is the value of Fennec that is recorded on the company's balance sheet. Investors also form their own opinion of Fennec Pharmaceuticals' value that differs from its market value or its book value, called intrinsic value, which is Fennec Pharmaceuticals' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Fennec Pharmaceuticals' market value can be influenced by many factors that don't directly affect Fennec Pharmaceuticals' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Fennec Pharmaceuticals' value and its price as these two are different measures arrived at by different means. Investors typically determine if Fennec Pharmaceuticals is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Fennec Pharmaceuticals' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
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.