Cinedigm Corp Debt
| CIDMDelisted Stock | USD 0.29 0.01 3.33% |
Cinedigm Corp holds a debt-to-equity ratio of 0.133. . Cinedigm Corp's financial risk is the risk to Cinedigm Corp stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Cinedigm Corp'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. Cinedigm Corp'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 Cinedigm Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Cinedigm Corp's stakeholders.
For most companies, including Cinedigm Corp, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Cinedigm Corp, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Cinedigm Corp'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 Cinedigm Corp'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 Cinedigm Corp 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 Cinedigm Corp to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Cinedigm Corp is said to be less leveraged. If creditors hold a majority of Cinedigm Corp's assets, the Company is said to be highly leveraged.
Cinedigm |
Cinedigm Corp Debt to Cash Allocation
Many companies such as Cinedigm Corp, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Cinedigm Corp currently holds 4.24 M in liabilities with Debt to Equity (D/E) ratio of 0.13, which may suggest the company is not taking enough advantage from borrowing. Cinedigm Corp has a current ratio of 0.8, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Cinedigm Corp's use of debt, we should always consider it together with its cash and equity.Cinedigm Corp 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 Cinedigm Corp's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Cinedigm Corp, which in turn will lower the firm's financial flexibility.Cinedigm Corp Corporate Bonds Issued
Understaning Cinedigm Corp Use of Financial Leverage
Leverage ratios show Cinedigm Corp's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Cinedigm Corp's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
Cinedigm Corp., together with its subsidiaries, operates as distributor and aggregator of independent movie, television, and other short form content in the United States. Cinedigm Corp. was incorporated in 2000 and is headquartered in New York, New York. Cinedigm Corp operates under Entertainment classification in the United States and is traded on NASDAQ Exchange. It employs 134 people. Please read more on our technical analysis page.
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Other Consideration for investing in Cinedigm Stock
If you are still planning to invest in Cinedigm Corp check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the Cinedigm Corp's history and understand the potential risks before investing.
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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.