VirnetX Holding Corp Corporate Bonds and Leverage Analysis
| VHC Stock | USD 5.15 0.14 2.79% |
At present, VirnetX Holding's Interest Debt Per Share is projected to increase slightly based on the last few years of reporting. With a high degree of financial leverage come high-interest payments, which usually reduce VirnetX Holding's Earnings Per Share (EPS).
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.0244 | Current Value 0.0218 | Quarterly Volatility 0.00150992 |
VirnetX |
Given the importance of VirnetX Holding's capital structure, the first step in the capital decision process is for the management of VirnetX Holding 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 VirnetX Holding Corp to issue bonds at a reasonable cost.
VirnetX Holding Bond Ratings
VirnetX Holding Corp financial ratings play a critical role in determining how much VirnetX Holding 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 VirnetX Holding's borrowing costs.| Piotroski F Score | 4 | Poor | View |
| Beneish M Score | (2.92) | Unlikely Manipulator | View |
VirnetX Holding Corp Debt to Cash Allocation
As VirnetX Holding Corp follows its natural business cycle, the capital allocation decisions will not magically go away. VirnetX Holding'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.
VirnetX Holding Corp has 4.4 M in debt. VirnetX Holding Corp has a current ratio of 215.37, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for VirnetX to invest in growth at high rates of return. VirnetX Holding Total Assets Over Time
VirnetX Holding Assets Financed by Debt
The debt-to-assets ratio shows the degree to which VirnetX Holding 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.VirnetX Holding Debt Ratio | 2.18 |
VirnetX Holding Corporate Bonds Issued
Most VirnetX bonds can be classified according to their maturity, which is the date when VirnetX Holding 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.
VirnetX Net Debt
Net Debt |
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Understaning VirnetX Holding Use of Financial Leverage
VirnetX Holding's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures VirnetX Holding's total debt position, including all outstanding debt obligations, and compares it with VirnetX Holding's equity. Financial leverage can amplify the potential profits to VirnetX Holding's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if VirnetX Holding is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Net Debt | -26.3 M | -27.6 M | |
| Short and Long Term Debt Total | 52.9 K | 50.3 K | |
| Short and Long Term Debt | 288 K | 256 K | |
| Net Debt To EBITDA | 0.84 | 0.88 | |
| Debt To Equity | 0.03 | 0.02 | |
| Interest Debt Per Share | 0.01 | 0.01 | |
| Debt To Assets | 0.02 | 0.02 | |
| Long Term Debt To Capitalization | 0.02 | 0.02 | |
| Total Debt To Capitalization | 0.03 | 0.02 | |
| Debt Equity Ratio | 0.03 | 0.02 | |
| Debt Ratio | 0.02 | 0.02 | |
| Cash Flow To Debt Ratio | (27.87) | (29.26) |
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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 VirnetX Holding Corp offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of VirnetX Holding'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 Virnetx Holding Corp Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Virnetx Holding Corp Stock:Check out the analysis of VirnetX Holding Fundamentals Over Time. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Is Application Software 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 VirnetX Holding. If investors know VirnetX 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 VirnetX Holding listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (5.32) | Revenue Per Share 0.002 | Quarterly Revenue Growth (0.50) | Return On Assets (0.23) | Return On Equity (0.35) |
The market value of VirnetX Holding Corp is measured differently than its book value, which is the value of VirnetX that is recorded on the company's balance sheet. Investors also form their own opinion of VirnetX Holding's value that differs from its market value or its book value, called intrinsic value, which is VirnetX Holding'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 VirnetX Holding's market value can be influenced by many factors that don't directly affect VirnetX Holding'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 VirnetX Holding's value and its price as these two are different measures arrived at by different means. Investors typically determine if VirnetX Holding is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, VirnetX Holding'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.