Fusion Pharm Corporate Bonds and Leverage Analysis
| FSPM Stock | USD 0.0001 0.00 0.00% |
At this time, Fusion Pharm's Short and Long Term Debt is very stable compared to the past year. As of the 25th of November 2024, Short Term Debt is likely to grow to 1,451, while Long Term Debt is likely to drop 2,879. . Fusion Pharm's financial risk is the risk to Fusion Pharm stockholders that is caused by an increase in debt.
As of the 25th of November 2024, Change To Liabilities is likely to grow to about 432.3 K, while Total Current Liabilities is likely to drop 5,325. Fusion |
Given the importance of Fusion Pharm's capital structure, the first step in the capital decision process is for the management of Fusion Pharm to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Fusion Pharm to issue bonds at a reasonable cost.
Fusion Pharm Bond Ratings
Fusion Pharm financial ratings play a critical role in determining how much Fusion Pharm 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 Fusion Pharm's borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (410.50) | Unlikely Manipulator | View |
Fusion Pharm Debt to Cash Allocation
Many companies such as Fusion Pharm, 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.
Fusion Pharm currently holds 1.2 K in liabilities. Fusion Pharm has a current ratio of 0.72, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Fusion Pharm's use of debt, we should always consider it together with its cash and equity.Fusion Pharm Total Assets Over Time
Fusion Pharm 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 Fusion Pharm's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Fusion Pharm, which in turn will lower the firm's financial flexibility.Fusion Pharm Corporate Bonds Issued
Fusion Long Term Debt
Long Term Debt |
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Understaning Fusion Pharm Use of Financial Leverage
Leverage ratios show Fusion Pharm's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Fusion Pharm's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Long Term Debt | 3 K | 2.9 K | |
| Short and Long Term Debt | 1.4 K | 1.5 K | |
| Short Term Debt | 1.4 K | 1.5 K |
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Is Consumer Staples Distribution & Retail 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 Fusion Pharm. If investors know Fusion 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 Fusion Pharm listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (0.15) | Revenue Per Share 0.133 | Return On Assets (1.38) |
The market value of Fusion Pharm is measured differently than its book value, which is the value of Fusion that is recorded on the company's balance sheet. Investors also form their own opinion of Fusion Pharm's value that differs from its market value or its book value, called intrinsic value, which is Fusion Pharm's 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 Fusion Pharm's market value can be influenced by many factors that don't directly affect Fusion Pharm's 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 Fusion Pharm's value and its price as these two are different measures arrived at by different means. Investors typically determine if Fusion Pharm is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Fusion Pharm's 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.