Stephan Debt
| SPCODelisted Stock | USD 1.64 0.06 3.53% |
The Stephan holds a debt-to-equity ratio of 0.011. With a high degree of financial leverage come high-interest payments, which usually reduce Stephan's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Stephan'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. Stephan'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 Stephan Pink Sheet's retail investors understand whether an upcoming fall or rise in the market will negatively affect Stephan's stakeholders.
For most companies, including Stephan, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for The Stephan Co, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Stephan'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 Stephan'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 Stephan 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 Stephan to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Stephan is said to be less leveraged. If creditors hold a majority of Stephan's assets, the Company is said to be highly leveraged.
Stephan |
The Stephan Debt to Cash Allocation
The Stephan Co currently holds 118 K in liabilities with Debt to Equity (D/E) ratio of 0.01, which may suggest the company is not taking enough advantage from borrowing. The Stephan has a current ratio of 4.09, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Stephan until it has trouble settling it off, either with new capital or with free cash flow. So, Stephan'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 The Stephan sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Stephan to invest in growth at high rates of return. When we think about Stephan's use of debt, we should always consider it together with cash and equity.Stephan 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 Stephan's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Stephan, which in turn will lower the firm's financial flexibility.Stephan Corporate Bonds Issued
Understaning Stephan Use of Financial Leverage
Leverage ratios show Stephan'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 Stephan'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).
The Stephan Co., together with its subsidiaries, manufactures, sells, and distributes hair care and personal care products. The Stephan Co. was founded in 1897 and is headquartered in Williamsport, Pennsylvania. STEPHAN CO operates under Household Personal Products classification in the United States and is traded on OTC Exchange. It employs 95 people. Please read more on our technical analysis page.
Pair Trading with Stephan
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 Stephan 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 Stephan will appreciate offsetting losses from the drop in the long position's value.Moving against Stephan Pink Sheet
| 0.62 | KO | Coca Cola Fiscal Year End 11th of February 2025 | PairCorr |
| 0.56 | JNJ | Johnson Johnson Fiscal Year End 28th of January 2025 | PairCorr |
| 0.43 | AFFL | Affiliated Resources Corp | PairCorr |
| 0.31 | MCD | McDonalds Sell-off Trend | PairCorr |
The ability to find closely correlated positions to Stephan could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Stephan 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 Stephan - 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 The Stephan Co to buy it.
The correlation of Stephan 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 Stephan moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if The Stephan 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 Stephan 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.Check out World Market Map to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in main economic indicators. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
Other Consideration for investing in Stephan Pink Sheet
If you are still planning to invest in The Stephan 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 Stephan'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.