The most popular of the capitalizations is the large cap stocks, which are the Apples and Facebooks of the world. These companies are the ones that many people invest and trade in because they are most familiar with their brand and what they do. If you look at the Dow Jones Industrial Average, these are all large cap stocks. The S&P 500 is also made up of some large cap stocks.
How important is ShiftPixy's Liquidity
ShiftPixy
financial leverage refers to using borrowed capital as a funding source to finance ShiftPixy ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. ShiftPixy financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to ShiftPixy's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of ShiftPixy'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). Please check the
breakdown between ShiftPixy's total debt and its cash.
Taking the next step, there is the mid cap stocks, which many are companies that we may have heard of but are unsure what they do. Mid cap stocks are still solid companies and many have been around for quite some time, but it also could include some newer companies with stock prices that are lower. People who are willing to take on a little more risk for potentially more return on their investment, the mid cap level is the place to look.
Then there is small and micro cap stocks, which are companies who are very small compared and have low stock prices typically. These companies are smaller and typically do not have the reputation of being a sturdy investment. However, the potential for serious returns is there, but the risk level here is the greatest at this level looking at the capitalization levels.
When you are building a portfolio or looking at funds, it is important to stop and think how much of each level you want in your portfolio. Someone who is just starting out may be more apt to look at the mid and small cap area because it can generate greater returns and the risk tolerance is greater when first starting out. If it is towards the end of your investing life, you may want to stick with large cap stocks as these are the most likely to perform well.
Be sure to take a look at your current portfolio holdings and see how they are allocated among the three different capitalization levels and see if you are comfortable with where they line up. If you are unable to take the time, you may be interested in putting your money in mutual funds that cover these three areas as they can give you sector exposure without the company specific risk. Take the time and understand each area and see if you could reallocate your portfolio to limit risk and grow returns.
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Nathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States.
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