Preferred Bank Debt
| PFBC Stock | USD 93.76 0.68 0.73% |
Preferred Bank holds a debt-to-equity ratio of 0.16. The current year's Short Term Debt is expected to grow to about 7.5 M, whereas Net Debt is projected to grow to (705.7 M). With a high degree of financial leverage come high-interest payments, which usually reduce Preferred Bank's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Preferred Bank'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. Preferred Bank'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 Preferred Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Preferred Bank's stakeholders.
For most companies, including Preferred Bank, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Preferred Bank, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Preferred Bank'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 1.6366 | Book Value 56.536 | Operating Margin 0.7081 | Profit Margin 0.5234 | Return On Assets 0.0202 |
Preferred |
Preferred Bank Bond Ratings
Preferred Bank financial ratings play a critical role in determining how much Preferred Bank 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 Preferred Bank's borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (2.34) | Unlikely Manipulator | View |
Preferred Bank Debt to Cash Allocation
As Preferred Bank follows its natural business cycle, the capital allocation decisions will not magically go away. Preferred Bank'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.
Preferred Bank currently holds 168 M in liabilities with Debt to Equity (D/E) ratio of 0.16, which may suggest the company is not taking enough advantage from borrowing. Note, when we think about Preferred Bank's use of debt, we should always consider it together with its cash and equity.Preferred Bank Total Assets Over Time
Preferred Bank Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Preferred Bank 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.Preferred Bank Debt Ratio | 1.73 |
Preferred Bank Corporate Bonds Issued
Most Preferred bonds can be classified according to their maturity, which is the date when Preferred Bank 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.
Preferred Net Debt
Net Debt |
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Understaning Preferred Bank Use of Financial Leverage
Preferred Bank's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Preferred Bank's total debt position, including all outstanding debt obligations, and compares it with Preferred Bank's equity. Financial leverage can amplify the potential profits to Preferred Bank's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Preferred Bank is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Net Debt | -742.9 M | -705.7 M | |
| Long Term Debt | 148.2 M | 74.5 M | |
| Short and Long Term Debt Total | 168 M | 85 M | |
| Short Term Debt | 4.9 M | 7.5 M | |
| Short and Long Term Debt | 1.2 M | 1.1 M | |
| Long Term Debt Total | 114.1 M | 108.9 M | |
| Net Debt To EBITDA | (3.51) | (3.69) | |
| Debt To Equity | 0.22 | 0.18 | |
| Interest Debt Per Share | 24.24 | 14.50 | |
| Debt To Assets | 0.02 | 0.02 | |
| Long Term Debt To Capitalization | 0.18 | 0.14 | |
| Total Debt To Capitalization | 0.18 | 0.14 | |
| Debt Equity Ratio | 0.22 | 0.18 | |
| Debt Ratio | 0.02 | 0.02 | |
| Cash Flow To Debt Ratio | 1.14 | 1.10 |
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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 Preferred Bank offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Preferred Bank'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 Preferred Bank Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Preferred Bank Stock:Check out the analysis of Preferred Bank Fundamentals Over Time. For information on how to trade Preferred Stock refer to our How to Trade Preferred Stock guide.You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Is Regional Banks 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 Preferred Bank. If investors know Preferred 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 Preferred Bank 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 (0.09) | Dividend Share 2.8 | Earnings Share 9.99 | Revenue Per Share 19.356 | Quarterly Revenue Growth (0.05) |
The market value of Preferred Bank is measured differently than its book value, which is the value of Preferred that is recorded on the company's balance sheet. Investors also form their own opinion of Preferred Bank's value that differs from its market value or its book value, called intrinsic value, which is Preferred Bank'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 Preferred Bank's market value can be influenced by many factors that don't directly affect Preferred Bank'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 Preferred Bank's value and its price as these two are different measures arrived at by different means. Investors typically determine if Preferred Bank is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Preferred Bank'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.