Verona Pharma Debt
| VRNA Stock | USD 37.86 0.99 2.55% |
Verona Pharma PLC holds a debt-to-equity ratio of 0.05. At present, Verona Pharma's Long Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt Total is expected to grow to about 592.9 K, whereas Net Debt is projected to grow to (209.4 M). With a high degree of financial leverage come high-interest payments, which usually reduce Verona Pharma's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Verona Pharma'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. Verona Pharma'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 Verona Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Verona Pharma's stakeholders.
For most companies, including Verona Pharma, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Verona Pharma PLC, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Verona Pharma'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 23.7421 | Book Value 1.595 | Operating Margin (6.94) | Return On Assets (0.28) | Return On Equity (0.78) |
Verona |
Verona Pharma Bond Ratings
Verona Pharma PLC financial ratings play a critical role in determining how much Verona Pharma 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 Verona Pharma's borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (2.63) | Unlikely Manipulator | View |
Verona Pharma PLC Debt to Cash Allocation
As Verona Pharma PLC follows its natural business cycle, the capital allocation decisions will not magically go away. Verona Pharma'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.
Verona Pharma PLC currently holds 51.33 M in liabilities with Debt to Equity (D/E) ratio of 0.05, which may suggest the company is not taking enough advantage from borrowing. Verona Pharma PLC has a current ratio of 3.5, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Verona Pharma's use of debt, we should always consider it together with its cash and equity.Verona Pharma Total Assets Over Time
Verona Pharma Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Verona Pharma 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.Verona Pharma Debt Ratio | 16.0 |
Verona Pharma Corporate Bonds Issued
Most Verona bonds can be classified according to their maturity, which is the date when Verona Pharma PLC 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.
Verona Net Debt
Net Debt |
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Understaning Verona Pharma Use of Financial Leverage
Verona Pharma's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Verona Pharma's total debt position, including all outstanding debt obligations, and compares it with Verona Pharma's equity. Financial leverage can amplify the potential profits to Verona Pharma's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Verona Pharma is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Net Debt | -220.4 M | -209.4 M | |
| Long Term Debt | 48.4 M | 50.8 M | |
| Short Term Debt | 1.2 M | 694.2 K | |
| Long Term Debt Total | 564.6 K | 592.9 K | |
| Short and Long Term Debt Total | 51.3 M | 53.9 M | |
| Net Debt To EBITDA | 4.20 | 3.99 | |
| Debt To Equity | 0.19 | 0.20 | |
| Interest Debt Per Share | 0.64 | 0.67 | |
| Debt To Assets | 0.16 | 0.16 | |
| Long Term Debt To Capitalization | 0.16 | 0.17 | |
| Total Debt To Capitalization | 0.16 | 0.17 | |
| Debt Equity Ratio | 0.19 | 0.20 | |
| Debt Ratio | 0.16 | 0.16 | |
| Cash Flow To Debt Ratio | (1.04) | (1.09) |
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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 Verona Pharma PLC offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Verona Pharma'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 Verona Pharma Plc Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Verona Pharma Plc Stock:Check out the analysis of Verona Pharma Fundamentals Over Time. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Is Pharmaceuticals 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 Verona Pharma. If investors know Verona 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 Verona Pharma listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (2.00) | Revenue Per Share 0.07 | Return On Assets (0.28) | Return On Equity (0.78) |
The market value of Verona Pharma PLC is measured differently than its book value, which is the value of Verona that is recorded on the company's balance sheet. Investors also form their own opinion of Verona Pharma's value that differs from its market value or its book value, called intrinsic value, which is Verona Pharma'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 Verona Pharma's market value can be influenced by many factors that don't directly affect Verona Pharma'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 Verona Pharma's value and its price as these two are different measures arrived at by different means. Investors typically determine if Verona Pharma is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Verona Pharma'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.