Coffee Holding Corporate Bonds and Leverage Analysis
| JVA Stock | USD 3.49 0.14 3.86% |
Coffee Holding holds a debt-to-equity ratio of 0.334. At present, Coffee Holding's Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting. The current year's Net Debt is expected to grow to about 12.2 M, whereas Long Term Debt is forecasted to decline to 3,315. With a high degree of financial leverage come high-interest payments, which usually reduce Coffee Holding's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Coffee Holding'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. Coffee Holding'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 Coffee Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Coffee Holding's stakeholders.
For most companies, including Coffee Holding, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Coffee Holding Co, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Coffee Holding's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 0.7996 | Book Value 4.365 | Operating Margin 0.0383 | Profit Margin 0.0148 | Return On Assets 0.0264 |
Coffee |
Given the importance of Coffee Holding's capital structure, the first step in the capital decision process is for the management of Coffee Holding 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 Coffee Holding Co to issue bonds at a reasonable cost.
Coffee Holding Bond Ratings
Coffee Holding Co financial ratings play a critical role in determining how much Coffee Holding 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 Coffee Holding's borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (3.27) | Unlikely Manipulator | View |
Coffee Holding Debt to Cash Allocation
As Coffee Holding Co follows its natural business cycle, the capital allocation decisions will not magically go away. Coffee Holding's 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.
Coffee Holding Co has 12.86 M in debt with debt to equity (D/E) ratio of 0.33, which is OK given its current industry classification. Coffee Holding has a current ratio of 5.4, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Coffee to invest in growth at high rates of return. Coffee Holding Total Assets Over Time
Coffee Holding Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Coffee Holding 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.Coffee Holding Debt Ratio | 22.0 |
Coffee Holding Corporate Bonds Issued
Most Coffee bonds can be classified according to their maturity, which is the date when Coffee Holding Co 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.
Coffee Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Coffee Holding Use of Financial Leverage
Coffee Holding's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Coffee Holding's total debt position, including all outstanding debt obligations, and compares it with Coffee Holding's equity. Financial leverage can amplify the potential profits to Coffee Holding's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Coffee Holding is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 14.8 M | 15.5 M | |
| Net Debt | 11.6 M | 12.2 M | |
| Short Term Debt | 11.4 M | 11.9 M | |
| Long Term Debt | 3.5 K | 3.3 K | |
| Short and Long Term Debt | 8.7 M | 9.1 M | |
| Long Term Debt Total | 3.4 M | 3.1 M | |
| Net Debt To EBITDA | 24.28 | 25.50 | |
| Debt To Equity | 0.46 | 0.50 | |
| Interest Debt Per Share | 1.61 | 1.69 | |
| Debt To Assets | 0.26 | 0.22 | |
| Total Debt To Capitalization | 0.33 | 0.39 | |
| Debt Equity Ratio | 0.46 | 0.50 | |
| Debt Ratio | 0.26 | 0.22 | |
| Cash Flow To Debt Ratio | 0.06 | 0.06 |
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Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.When determining whether Coffee Holding offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Coffee Holding'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 Coffee Holding Co Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Coffee Holding Co Stock:Check out the analysis of Coffee Holding Fundamentals Over Time. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Is Packaged Foods & Meats 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 Coffee Holding. If investors know Coffee 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 Coffee Holding listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.58) | Earnings Share 0.2 | Revenue Per Share 13.333 | Quarterly Revenue Growth 0.193 | Return On Assets 0.0264 |
The market value of Coffee Holding is measured differently than its book value, which is the value of Coffee that is recorded on the company's balance sheet. Investors also form their own opinion of Coffee Holding's value that differs from its market value or its book value, called intrinsic value, which is Coffee Holding'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 Coffee Holding's market value can be influenced by many factors that don't directly affect Coffee Holding'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 Coffee Holding's value and its price as these two are different measures arrived at by different means. Investors typically determine if Coffee Holding is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Coffee Holding'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.