DocuSign Current Debt
| D1OC34 Stock | BRL 29.58 0.60 2.07% |
DocuSign has over 718.49 Million in debt which may indicate that it relies heavily on debt financing. With a high degree of financial leverage come high-interest payments, which usually reduce DocuSign's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
DocuSign'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. DocuSign'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 DocuSign Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect DocuSign's stakeholders.
For most companies, including DocuSign, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for DocuSign, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, DocuSign'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 DocuSign'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 DocuSign 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 DocuSign to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, DocuSign is said to be less leveraged. If creditors hold a majority of DocuSign's assets, the Company is said to be highly leveraged.
DocuSign |
DocuSign Debt to Cash Allocation
DocuSign has accumulated 718.49 M in total debt with debt to equity ratio (D/E) of 3.89, implying the company greatly relies on financing operations through barrowing. DocuSign has a current ratio of 0.99, indicating that it has a negative working capital and may not be able to pay financial obligations in time and when they become due. Debt can assist DocuSign until it has trouble settling it off, either with new capital or with free cash flow. So, DocuSign's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like DocuSign sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for DocuSign to invest in growth at high rates of return. When we think about DocuSign's use of debt, we should always consider it together with cash and equity.DocuSign 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 DocuSign's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of DocuSign, which in turn will lower the firm's financial flexibility.Understaning DocuSign Use of Financial Leverage
DocuSign's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures DocuSign's total debt position, including all outstanding debt obligations, and compares it with DocuSign's equity. Financial leverage can amplify the potential profits to DocuSign's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if DocuSign is unable to cover its debt costs.
DocuSign, Inc. provides cloud based software in the United States and internationally. The company was incorporated in 2003 and is headquartered in San Francisco, California. DOCUSIGN INCDRN operates under SoftwareApplication classification in Brazil and is traded on Sao Paolo Stock Exchange. It employs 5630 people. Please read more on our technical analysis page.
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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.Additional Information and Resources on Investing in DocuSign Stock
When determining whether DocuSign is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if DocuSign Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Docusign Stock. Highlighted below are key reports to facilitate an investment decision about Docusign Stock:Check out the analysis of DocuSign Fundamentals Over Time. For information on how to trade DocuSign Stock refer to our How to Trade DocuSign Stock guide.You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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.