Star Equity Debt
| STRRP Preferred Stock | USD 9.41 0.06 0.64% |
Star Equity Holdings holds a debt-to-equity ratio of 0.416. . Star Equity's financial risk is the risk to Star Equity stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Star Equity'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. Star Equity'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 Star Preferred Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Star Equity's stakeholders.
For most companies, including Star Equity, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Star Equity Holdings, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Star Equity's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Star Equity's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Star Equity is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Star Equity to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Star Equity is said to be less leveraged. If creditors hold a majority of Star Equity's assets, the Company is said to be highly leveraged.
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Star Equity Holdings Debt to Cash Allocation
Star Equity Holdings has accumulated 17.7 M in total debt with debt to equity ratio (D/E) of 0.42, which is about average as compared to similar companies. Star Equity Holdings has a current ratio of 1.33, which is within standard range for the sector. Debt can assist Star Equity until it has trouble settling it off, either with new capital or with free cash flow. So, Star Equity's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Star Equity Holdings sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Star to invest in growth at high rates of return. When we think about Star Equity's use of debt, we should always consider it together with cash and equity.Star Equity 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 Star Equity's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Star Equity, which in turn will lower the firm's financial flexibility.Star Equity Corporate Bonds Issued
Understaning Star Equity Use of Financial Leverage
Star Equity's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Star Equity's current equity. If creditors own a majority of Star Equity's assets, the company is considered highly leveraged. Understanding the composition and structure of Star Equity's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Star Equity Holdings, Inc. provides healthcare solutions in the United States and internationally. Star Equity Holdings, Inc. was founded in 1985 and is headquartered in Old Greenwich, Connecticut. Star Equity operates under Diagnostics Research classification in the United States and is traded on NASDAQ Exchange. It employs 458 people. Please read more on our technical analysis page.
Pair Trading with Star Equity
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Star Equity position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Star Equity will appreciate offsetting losses from the drop in the long position's value.Moving against Star Preferred Stock
| 0.59 | YCBD-PA | cbdMD Inc | PairCorr |
| 0.52 | ELTP | Elite Pharma | PairCorr |
| 0.46 | VAXX | Vaxxinity | PairCorr |
| 0.39 | EPRX | Eupraxia Pharmaceuticals | PairCorr |
The ability to find closely correlated positions to Star Equity could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Star Equity when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Star Equity - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Star Equity Holdings to buy it.
The correlation of Star Equity is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Star Equity moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Star Equity Holdings moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Star Equity can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Additional Tools for Star Preferred Stock Analysis
When running Star Equity's price analysis, check to measure Star Equity's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Star Equity is operating at the current time. Most of Star Equity's value examination focuses on studying past and present price action to predict the probability of Star Equity's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Star Equity's price. Additionally, you may evaluate how the addition of Star Equity to your portfolios can decrease your overall portfolio volatility.
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.