BioRestorative Therapies Debt
| BRTX Stock | USD 1.46 0.01 0.68% |
BioRestorative Therapies holds a debt-to-equity ratio of 0.019. With a high degree of financial leverage come high-interest payments, which usually reduce BioRestorative Therapies' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
BioRestorative Therapies' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. BioRestorative Therapies' 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 BioRestorative Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect BioRestorative Therapies' stakeholders.
For most companies, including BioRestorative Therapies, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for BioRestorative Therapies, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, BioRestorative Therapies' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that BioRestorative Therapies' 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 BioRestorative Therapies 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 BioRestorative Therapies to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, BioRestorative Therapies is said to be less leveraged. If creditors hold a majority of BioRestorative Therapies' assets, the Company is said to be highly leveraged.
BioRestorative |
BioRestorative Therapies Debt to Cash Allocation
As BioRestorative Therapies follows its natural business cycle, the capital allocation decisions will not magically go away. BioRestorative Therapies' 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.
BioRestorative Therapies currently holds 162.32 K in liabilities with Debt to Equity (D/E) ratio of 0.02, which may suggest the company is not taking enough advantage from borrowing. BioRestorative Therapies has a current ratio of 28.88, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about BioRestorative Therapies' use of debt, we should always consider it together with its cash and equity.BioRestorative Therapies 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 BioRestorative Therapies' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of BioRestorative Therapies, which in turn will lower the firm's financial flexibility.BioRestorative Therapies Corporate Bonds Issued
Understaning BioRestorative Therapies Use of Financial Leverage
Understanding the structure of BioRestorative Therapies' debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to BioRestorative Therapies' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
BioRestorative Therapies, Inc., a life sciences company, focuses on the development of regenerative medicine products and therapies using cell and tissue protocols primarily involving adult stem cells. BioRestorative Therapies, Inc. was incorporated in 1997 and is based in Melville, New York. Biorestorative Therapies operates under Biotechnology classification in the United States and is traded on NASDAQ Exchange. It employs 7 people. Please read more on our technical analysis page.
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When running BioRestorative Therapies' price analysis, check to measure BioRestorative Therapies' 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 BioRestorative Therapies is operating at the current time. Most of BioRestorative Therapies' value examination focuses on studying past and present price action to predict the probability of BioRestorative Therapies' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move BioRestorative Therapies' price. Additionally, you may evaluate how the addition of BioRestorative Therapies 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.