Oxbridge Acquisition Corp Corporate Bonds and Leverage Analysis
| OXACDelisted Stock | USD 11.06 0.00 0.00% |
Oxbridge Acquisition Corp has over 575,000 in debt which may indicate that it relies heavily on debt financing. With a high degree of financial leverage come high-interest payments, which usually reduce Oxbridge Acquisition's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Oxbridge Acquisition'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. Oxbridge Acquisition'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 Oxbridge Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Oxbridge Acquisition's stakeholders.
For most companies, including Oxbridge Acquisition, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Oxbridge Acquisition Corp, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Oxbridge Acquisition's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Oxbridge |
Given the importance of Oxbridge Acquisition's capital structure, the first step in the capital decision process is for the management of Oxbridge Acquisition 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 Oxbridge Acquisition Corp to issue bonds at a reasonable cost.
Oxbridge Acquisition Corp Debt to Cash Allocation
As Oxbridge Acquisition Corp follows its natural business cycle, the capital allocation decisions will not magically go away. Oxbridge Acquisition'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.
Oxbridge Acquisition Corp currently holds 575 K in liabilities with Debt to Equity (D/E) ratio of 8.21, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Oxbridge Acquisition Corp has a current ratio of 33.46, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Oxbridge Acquisition's use of debt, we should always consider it together with its cash and equity.Oxbridge Acquisition 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 Oxbridge Acquisition's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Oxbridge Acquisition, which in turn will lower the firm's financial flexibility.Oxbridge Acquisition Corporate Bonds Issued
Most Oxbridge bonds can be classified according to their maturity, which is the date when Oxbridge Acquisition Corp 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 Oxbridge Acquisition Use of Financial Leverage
Oxbridge Acquisition's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Oxbridge Acquisition's total debt position, including all outstanding debt obligations, and compares it with Oxbridge Acquisition's equity. Financial leverage can amplify the potential profits to Oxbridge Acquisition's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Oxbridge Acquisition is unable to cover its debt costs.
Oxbridge Acquisition Corp. does not have significant operations. The company was incorporated in 2021 and is based in Georgetown, Cayman Islands. Oxbridge Acquisition is traded on NASDAQ Exchange in the United States. Please read more on our technical analysis page.
Also Currently Popular
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.Check out Your Equity Center to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in nation. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Consideration for investing in Oxbridge Stock
If you are still planning to invest in Oxbridge Acquisition Corp check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Oxbridge Acquisition's history and understand the potential risks before investing.
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |
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.