Impinj Inc Corporate Bonds and Leverage Analysis
| PI Stock | USD 192.09 3.79 2.01% |
As of now, Impinj's Short and Long Term Debt is increasing as compared to previous years. The Impinj's current Long Term Debt Total is estimated to increase to about 338.4 M, while Short Term Debt is projected to decrease to under 6.6 M. With a high degree of financial leverage come high-interest payments, which usually reduce Impinj's Earnings Per Share (EPS).
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.79360283 | Current Value 0.83 | Quarterly Volatility 0.29858875 |
Impinj |
Given the importance of Impinj's capital structure, the first step in the capital decision process is for the management of Impinj 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 Impinj Inc to issue bonds at a reasonable cost.
Impinj Inc Debt to Cash Allocation
As Impinj Inc follows its natural business cycle, the capital allocation decisions will not magically go away. Impinj'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.
Impinj Inc reports 294.59 M of total liabilities. Impinj Inc has a current ratio of 7.58, indicating that it is in good position to pay out its debt commitments in time. Note however, debt could still be an excellent tool for Impinj to invest in growth at high rates of return. Impinj Total Assets Over Time
Impinj Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Impinj 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.Impinj Debt Ratio | 83.0 |
Impinj Corporate Bonds Issued
Most Impinj bonds can be classified according to their maturity, which is the date when Impinj 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.
Impinj Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Impinj Use of Financial Leverage
Understanding the composition and structure of Impinj's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Impinj's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 294.6 M | 309.3 M | |
| Net Debt | 199.8 M | 209.8 M | |
| Short Term Debt | 6.7 M | 6.6 M | |
| Long Term Debt | 281.9 M | 295.9 M | |
| Short and Long Term Debt | 11.1 M | 11.6 M | |
| Long Term Debt Total | 322.3 M | 338.4 M | |
| Net Debt To EBITDA | (7.92) | (7.53) | |
| Debt To Equity | 8.36 | 8.77 | |
| Interest Debt Per Share | 10.84 | 11.39 | |
| Debt To Assets | 0.79 | 0.83 | |
| Long Term Debt To Capitalization | 0.89 | 0.94 | |
| Total Debt To Capitalization | 0.89 | 0.94 | |
| Debt Equity Ratio | 8.36 | 8.77 | |
| Debt Ratio | 0.79 | 0.83 | |
| Cash Flow To Debt Ratio | (0.17) | (0.18) |
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Check out the analysis of Impinj Fundamentals Over Time. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Is Semiconductors & Semiconductor Equipment 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 Impinj. If investors know Impinj 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 Impinj listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share 0.92 | Revenue Per Share 12.494 | Quarterly Revenue Growth 0.464 | Return On Assets (0.02) | Return On Equity 0.3318 |
The market value of Impinj Inc is measured differently than its book value, which is the value of Impinj that is recorded on the company's balance sheet. Investors also form their own opinion of Impinj's value that differs from its market value or its book value, called intrinsic value, which is Impinj'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 Impinj's market value can be influenced by many factors that don't directly affect Impinj'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 Impinj's value and its price as these two are different measures arrived at by different means. Investors typically determine if Impinj is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Impinj'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.