AvidXchange Holdings ACGCAP Bond

AVDX Stock  USD 11.11  0.07  0.63%   
AvidXchange Holdings holds a debt-to-equity ratio of 0.285. At this time, AvidXchange Holdings' Long Term Debt is fairly stable compared to the past year. Long Term Debt Total is likely to rise to about 78.3 M in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 131.4 M in 2024. With a high degree of financial leverage come high-interest payments, which usually reduce AvidXchange Holdings' Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

AvidXchange 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. AvidXchange 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 AvidXchange Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect AvidXchange Holdings' stakeholders.
For most companies, including AvidXchange Holdings, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for AvidXchange Holdings, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, AvidXchange Holdings' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
3.4257
Book Value
3.293
Operating Margin
0.0111
Profit Margin
(0)
Return On Assets
(0)
Total Current Liabilities is likely to rise to about 1.8 B in 2024, whereas Liabilities And Stockholders Equity is likely to drop slightly above 1.8 B in 2024.
  
Check out the analysis of AvidXchange Holdings Fundamentals Over Time.
For more information on how to buy AvidXchange Stock please use our How to Invest in AvidXchange Holdings guide.
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Given the importance of AvidXchange Holdings' capital structure, the first step in the capital decision process is for the management of AvidXchange Holdings 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 AvidXchange Holdings to issue bonds at a reasonable cost.
Popular NameAvidXchange Holdings ACGCAP 195 20 SEP 26
SpecializationSoftware - Infrastructure
Equity ISIN CodeUS05368X1028
Bond Issue ISIN CodeUS05369AAL52
View All AvidXchange Holdings Outstanding Bonds

AvidXchange Holdings Outstanding Bond Obligations

Understaning AvidXchange Holdings Use of Financial Leverage

Understanding the structure of AvidXchange Holdings' debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to AvidXchange Holdings' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Last ReportedProjected for Next Year
Short and Long Term Debt Total143.7 M131.4 M
Net Debt-263.2 M-276.4 M
Long Term Debt69.8 M73.3 M
Short and Long Term Debt7.4 M4.3 M
Short Term Debt10 M7.5 M
Long Term Debt Total68.3 M78.3 M
Net Debt To EBITDA(79.75)(75.76)
Debt To Equity 0.12  0.11 
Interest Debt Per Share 0.45  0.57 
Debt To Assets 0.03  0.03 
Long Term Debt To Capitalization 0.10  0.09 
Total Debt To Capitalization 0.11  0.21 
Debt Equity Ratio 0.12  0.11 
Debt Ratio 0.03  0.03 
Cash Flow To Debt Ratio 0.11  0.11 
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Additional Tools for AvidXchange Stock Analysis

When running AvidXchange Holdings' price analysis, check to measure AvidXchange 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 AvidXchange Holdings is operating at the current time. Most of AvidXchange Holdings' value examination focuses on studying past and present price action to predict the probability of AvidXchange Holdings' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move AvidXchange Holdings' price. Additionally, you may evaluate how the addition of AvidXchange 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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.