OncoSec Medical Corporate Bonds and Leverage Analysis
| ONCSDelisted Stock | USD 0.06 0 3.63% |
OncoSec Medical holds a debt-to-equity ratio of 0.764. . OncoSec Medical's financial risk is the risk to OncoSec Medical stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
OncoSec Medical'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. OncoSec Medical'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 OncoSec Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect OncoSec Medical's stakeholders.
For most companies, including OncoSec Medical, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for OncoSec Medical, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, OncoSec Medical's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
OncoSec |
Given the importance of OncoSec Medical's capital structure, the first step in the capital decision process is for the management of OncoSec Medical 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 OncoSec Medical to issue bonds at a reasonable cost.
OncoSec Medical Debt to Cash Allocation
Many companies such as OncoSec Medical, 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.
OncoSec Medical currently holds 6.17 M in liabilities with Debt to Equity (D/E) ratio of 0.76, which is about average as compared to similar companies. OncoSec Medical has a current ratio of 4.42, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about OncoSec Medical's use of debt, we should always consider it together with its cash and equity.OncoSec Medical 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 OncoSec Medical's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of OncoSec Medical, which in turn will lower the firm's financial flexibility.OncoSec Medical Corporate Bonds Issued
Understaning OncoSec Medical Use of Financial Leverage
OncoSec Medical's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to OncoSec Medical's current equity. If creditors own a majority of OncoSec Medical's assets, the company is considered highly leveraged. Understanding the composition and structure of OncoSec Medical's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
OncoSec Medical Incorporated, a late-stage immuno-oncology company, focuses on designing, developing, commercializing intra-tumoral DNA-based therapeutics to stimulate and augment anti-tumor immune responses for the treatment of cancer. The company was incorporated in 2008 and is headquartered in Pennington, New Jersey. Oncosec Medical operates under Biotechnology classification in the United States and is traded on NASDAQ Exchange. It employs 54 people. Please read more on our technical analysis page.
Thematic Opportunities
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Other Consideration for investing in OncoSec Stock
If you are still planning to invest in OncoSec Medical 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 OncoSec Medical'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.