Soluna Holdings Debt
| SLNHP Preferred Stock | USD 12.74 1.63 14.67% |
Soluna Holdings Preferred holds a debt-to-equity ratio of 0.218. . Soluna Holdings' financial risk is the risk to Soluna Holdings stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Soluna Holdings' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Soluna Holdings' 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 Soluna Preferred Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Soluna Holdings' stakeholders.
For most companies, including Soluna Holdings, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Soluna Holdings Preferred, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Soluna Holdings' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Soluna Holdings' 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 Soluna Holdings 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 Soluna Holdings to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Soluna Holdings is said to be less leveraged. If creditors hold a majority of Soluna Holdings' assets, the Company is said to be highly leveraged.
Soluna |
Soluna Holdings Preferred Debt to Cash Allocation
Soluna Holdings Preferred has accumulated 23.3 M in total debt with debt to equity ratio (D/E) of 0.22, which may suggest the company is not taking enough advantage from borrowing. Soluna Holdings Preferred has a current ratio of 0.63, 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 Soluna Holdings until it has trouble settling it off, either with new capital or with free cash flow. So, Soluna Holdings' 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 Soluna Holdings Preferred sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Soluna to invest in growth at high rates of return. When we think about Soluna Holdings' use of debt, we should always consider it together with cash and equity.Soluna Holdings 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 Soluna Holdings' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Soluna Holdings, which in turn will lower the firm's financial flexibility.Soluna Holdings Corporate Bonds Issued
Understaning Soluna Holdings Use of Financial Leverage
Soluna Holdings' financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Soluna Holdings' current equity. If creditors own a majority of Soluna Holdings' assets, the company is considered highly leveraged. Understanding the composition and structure of Soluna Holdings' outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Soluna Holdings, Inc. builds and develops modular data centers for cryptocurrency mining. Soluna Hldgs operates under Information Technology Services classification in the United States and is traded on NASDAQ Exchange. It employs 54 people. Please read more on our technical analysis page.
Pair Trading with Soluna Holdings
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Soluna Holdings position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Soluna Holdings will appreciate offsetting losses from the drop in the long position's value.Moving together with Soluna Preferred Stock
Moving against Soluna Preferred Stock
The ability to find closely correlated positions to Soluna Holdings could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Soluna Holdings when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Soluna Holdings - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Soluna Holdings Preferred to buy it.
The correlation of Soluna Holdings is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Soluna Holdings moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Soluna Holdings Preferred moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Soluna Holdings can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Additional Tools for Soluna Preferred Stock Analysis
When running Soluna Holdings' price analysis, check to measure Soluna Holdings' 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 Soluna Holdings is operating at the current time. Most of Soluna Holdings' value examination focuses on studying past and present price action to predict the probability of Soluna Holdings' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Soluna Holdings' price. Additionally, you may evaluate how the addition of Soluna Holdings 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.