MEDIFAST INC Corporate Bonds and Leverage Analysis
| MED Stock | USD 19.44 1.12 6.11% |
MEDIFAST INC holds a debt-to-equity ratio of 0.434. At present, MEDIFAST INC's Short Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Short and Long Term Debt is expected to grow to about 277.2 K, whereas Net Debt To EBITDA is forecasted to decline to (0.55). . MEDIFAST INC's financial risk is the risk to MEDIFAST INC stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
MEDIFAST INC'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. MEDIFAST INC'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 MEDIFAST Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect MEDIFAST INC's stakeholders.
For most companies, including MEDIFAST INC, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for MEDIFAST INC, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, MEDIFAST INC'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 1.0255 | Book Value 19.467 | Operating Margin 0.015 | Profit Margin 0.0109 | Return On Assets 0.0477 |
MEDIFAST |
Given the importance of MEDIFAST INC's capital structure, the first step in the capital decision process is for the management of MEDIFAST INC 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 MEDIFAST INC to issue bonds at a reasonable cost.
MEDIFAST INC Bond Ratings
MEDIFAST INC financial ratings play a critical role in determining how much MEDIFAST INC 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 MEDIFAST INC's borrowing costs.| Piotroski F Score | 5 | Healthy | View |
| Beneish M Score | (3.03) | Unlikely Manipulator | View |
MEDIFAST INC Debt to Cash Allocation
Many companies such as MEDIFAST INC, 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.
MEDIFAST INC has 22.01 M in debt with debt to equity (D/E) ratio of 0.43, which is OK given its current industry classification. MEDIFAST INC has a current ratio of 1.26, demonstrating that it may not be capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for MEDIFAST to invest in growth at high rates of return. MEDIFAST INC Total Assets Over Time
MEDIFAST INC Assets Financed by Debt
The debt-to-assets ratio shows the degree to which MEDIFAST INC 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.MEDIFAST INC Debt Ratio | 1.8 |
MEDIFAST INC Corporate Bonds Issued
Most MEDIFAST bonds can be classified according to their maturity, which is the date when MEDIFAST 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.
MEDIFAST Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning MEDIFAST INC Use of Financial Leverage
MEDIFAST INC's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures MEDIFAST INC's total debt position, including all outstanding debt obligations, and compares it with MEDIFAST INC's equity. Financial leverage can amplify the potential profits to MEDIFAST INC's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if MEDIFAST INC is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 22 M | 23.1 M | |
| Net Debt | -72.4 M | -68.8 M | |
| Short Term Debt | 11.8 M | 12.4 M | |
| Short and Long Term Debt | 197.1 K | 277.2 K | |
| Net Debt To EBITDA | (0.52) | (0.55) | |
| Debt To Equity | 0.03 | 0.02 | |
| Interest Debt Per Share | 0.54 | 0.36 | |
| Debt To Assets | 0.02 | 0.02 | |
| Long Term Debt To Capitalization | 0.12 | 0.13 | |
| Total Debt To Capitalization | 0.03 | 0.03 | |
| Debt Equity Ratio | 0.03 | 0.02 | |
| Debt Ratio | 0.02 | 0.02 | |
| Cash Flow To Debt Ratio | 25.09 | 26.34 |
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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 MEDIFAST INC is a strong investment it is important to analyze MEDIFAST INC's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact MEDIFAST INC's future performance. For an informed investment choice regarding MEDIFAST Stock, refer to the following important reports:Check out the analysis of MEDIFAST INC Fundamentals Over Time. For information on how to trade MEDIFAST Stock refer to our How to Trade MEDIFAST Stock guide.You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Is Personal Care Products 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 MEDIFAST INC. If investors know MEDIFAST 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 MEDIFAST INC 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 (0.95) | Earnings Share 0.67 | Revenue Per Share 61.769 | Quarterly Revenue Growth (0.41) | Return On Assets 0.0477 |
The market value of MEDIFAST INC is measured differently than its book value, which is the value of MEDIFAST that is recorded on the company's balance sheet. Investors also form their own opinion of MEDIFAST INC's value that differs from its market value or its book value, called intrinsic value, which is MEDIFAST INC'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 MEDIFAST INC's market value can be influenced by many factors that don't directly affect MEDIFAST INC'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 MEDIFAST INC's value and its price as these two are different measures arrived at by different means. Investors typically determine if MEDIFAST INC is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, MEDIFAST INC'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.