Fate Therapeutics Corporate Bonds and Leverage Analysis
| FATE Stock | USD 3.17 0.49 18.28% |
Fate Therapeutics holds a debt-to-equity ratio of 0.193. At present, Fate Therapeutics' Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt To Capitalization is expected to grow to 0.09, whereas Short Term Debt is forecasted to decline to about 6.4 M. . Fate Therapeutics' financial risk is the risk to Fate Therapeutics stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Fate Therapeutics' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Fate Therapeutics' 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 Fate Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Fate Therapeutics' stakeholders.
For most companies, including Fate Therapeutics, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Fate Therapeutics, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Fate Therapeutics' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 0.9965 | Book Value 3.181 | Operating Margin (17.04) | Return On Assets (0.22) | Return On Equity (0.47) |
Fate |
Given the importance of Fate Therapeutics' capital structure, the first step in the capital decision process is for the management of Fate Therapeutics to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Fate Therapeutics to issue bonds at a reasonable cost.
Fate Therapeutics Bond Ratings
Fate Therapeutics financial ratings play a critical role in determining how much Fate Therapeutics 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 Fate Therapeutics' borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (2.78) | Unlikely Manipulator | View |
Fate Therapeutics Debt to Cash Allocation
Many companies such as Fate Therapeutics, 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.
Fate Therapeutics currently holds 103.54 M in liabilities with Debt to Equity (D/E) ratio of 0.19, which may suggest the company is not taking enough advantage from borrowing. Fate Therapeutics has a current ratio of 6.42, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Fate Therapeutics' use of debt, we should always consider it together with its cash and equity.Fate Therapeutics Total Assets Over Time
Fate Therapeutics Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Fate Therapeutics 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.Fate Therapeutics Debt Ratio | 1.16 |
Fate Therapeutics Corporate Bonds Issued
Most Fate bonds can be classified according to their maturity, which is the date when Fate Therapeutics 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.
Fate Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Fate Therapeutics Use of Financial Leverage
Fate Therapeutics' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Fate Therapeutics' total debt position, including all outstanding debt obligations, and compares it with Fate Therapeutics' equity. Financial leverage can amplify the potential profits to Fate Therapeutics' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Fate Therapeutics is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 103.5 M | 108.7 M | |
| Net Debt | 61.7 M | 64.7 M | |
| Long Term Debt | 14.3 M | 8.8 M | |
| Short Term Debt | 12.4 M | 6.4 M | |
| Long Term Debt Total | 11.2 M | 9.4 M | |
| Short and Long Term Debt | 2.8 M | 2.7 M | |
| Net Debt To EBITDA | (0.36) | (0.34) | |
| Debt To Equity | 0.02 | 0.02 | |
| Interest Debt Per Share | 0.06 | 0.06 | |
| Debt To Assets | 0.01 | 0.01 | |
| Long Term Debt To Capitalization | 0.06 | 0.09 | |
| Total Debt To Capitalization | 0.02 | 0.02 | |
| Debt Equity Ratio | 0.02 | 0.02 | |
| Debt Ratio | 0.01 | 0.01 | |
| Cash Flow To Debt Ratio | (21.42) | (22.49) |
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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 Fate Therapeutics is a strong investment it is important to analyze Fate Therapeutics' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Fate Therapeutics' future performance. For an informed investment choice regarding Fate Stock, refer to the following important reports:Check out the analysis of Fate Therapeutics Fundamentals Over Time. For information on how to trade Fate Stock refer to our How to Trade Fate Stock guide.You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Is Biotechnology 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 Fate Therapeutics. If investors know Fate 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 Fate Therapeutics listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share (1.64) | Revenue Per Share 0.123 | Quarterly Revenue Growth 0.581 | Return On Assets (0.22) | Return On Equity (0.47) |
The market value of Fate Therapeutics is measured differently than its book value, which is the value of Fate that is recorded on the company's balance sheet. Investors also form their own opinion of Fate Therapeutics' value that differs from its market value or its book value, called intrinsic value, which is Fate Therapeutics' 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 Fate Therapeutics' market value can be influenced by many factors that don't directly affect Fate Therapeutics' 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 Fate Therapeutics' value and its price as these two are different measures arrived at by different means. Investors typically determine if Fate Therapeutics is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Fate Therapeutics' 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.