Theratechnologies Current Debt
| TH Stock | CAD 1.70 0.02 1.19% |
Theratechnologies has over 58.97 Million in debt which may indicate that it relies heavily on debt financing. At this time, Theratechnologies' Net Debt is very stable compared to the past year. As of the 2nd of December 2024, Interest Debt Per Share is likely to grow to 2.46, while Short and Long Term Debt Total is likely to drop about 38.1 M. With a high degree of financial leverage come high-interest payments, which usually reduce Theratechnologies' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Theratechnologies' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Theratechnologies' 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 Theratechnologies Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Theratechnologies' stakeholders.
For most companies, including Theratechnologies, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Theratechnologies, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Theratechnologies' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 19.4616 | Book Value (0.43) | Operating Margin 0.2749 | Profit Margin (0.04) | Return On Assets 0.1176 |
Theratechnologies |
Theratechnologies Debt to Cash Allocation
Theratechnologies has accumulated 58.97 M in total debt with debt to equity ratio (D/E) of 6.46, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Theratechnologies has a current ratio of 1.86, which is within standard range for the sector. Debt can assist Theratechnologies until it has trouble settling it off, either with new capital or with free cash flow. So, Theratechnologies' 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 Theratechnologies sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Theratechnologies to invest in growth at high rates of return. When we think about Theratechnologies' use of debt, we should always consider it together with cash and equity.Theratechnologies Total Assets Over Time
Theratechnologies Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Theratechnologies 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.Theratechnologies Debt Ratio | 70.0 |
Theratechnologies Corporate Bonds Issued
Theratechnologies Short Long Term Debt Total
Short Long Term Debt Total |
|
Understaning Theratechnologies Use of Financial Leverage
Leverage ratios show Theratechnologies' 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 Theratechnologies' 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).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 67.8 M | 38.1 M | |
| Net Debt | 28.6 M | 30 M | |
| Short Term Debt | 8.9 M | 8.8 M | |
| Short and Long Term Debt | 8.4 M | 8 M | |
| Long Term Debt | 58.3 M | 34.4 M | |
| Long Term Debt Total | 1.7 M | 1.6 M | |
| Net Debt To EBITDA | (2.90) | (3.05) | |
| Debt To Equity | (2.50) | (2.38) | |
| Interest Debt Per Share | 2.34 | 2.46 | |
| Debt To Assets | 0.67 | 0.70 | |
| Long Term Debt To Capitalization | 1.53 | 1.61 | |
| Total Debt To Capitalization | 1.41 | 1.48 | |
| Debt Equity Ratio | (2.50) | (2.38) | |
| Debt Ratio | 0.67 | 0.70 | |
| Cash Flow To Debt Ratio | (0.09) | (0.09) |
Pair Trading with Theratechnologies
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 Theratechnologies 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 Theratechnologies will appreciate offsetting losses from the drop in the long position's value.The ability to find closely correlated positions to Theratechnologies could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Theratechnologies 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 Theratechnologies - 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 Theratechnologies to buy it.
The correlation of Theratechnologies 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 Theratechnologies moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Theratechnologies 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 Theratechnologies 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 the analysis of Theratechnologies Fundamentals Over Time. To learn how to invest in Theratechnologies Stock, please use our How to Invest in Theratechnologies guide.You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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.