Ballantyne Strong Corporate Bonds and Leverage Analysis
| BTNDelisted Stock | USD 2.65 0.13 5.16% |
Ballantyne Strong holds a debt-to-equity ratio of 0.188. With a high degree of financial leverage come high-interest payments, which usually reduce Ballantyne Strong's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Ballantyne Strong'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. Ballantyne Strong'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 Ballantyne Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Ballantyne Strong's stakeholders.
For most companies, including Ballantyne Strong, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Ballantyne Strong, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Ballantyne Strong's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Ballantyne |
Ballantyne Strong Debt to Cash Allocation
As Ballantyne Strong follows its natural business cycle, the capital allocation decisions will not magically go away. Ballantyne Strong's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Ballantyne Strong has 105 K in debt with debt to equity (D/E) ratio of 0.19, which may show that the company is not taking advantage of profits from borrowing. Ballantyne Strong has a current ratio of 1.25, demonstrating that it is in a questionable position to pay out its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Ballantyne to invest in growth at high rates of return. Ballantyne Strong 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 Ballantyne Strong's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Ballantyne Strong, which in turn will lower the firm's financial flexibility.Ballantyne Strong Corporate Bonds Issued
Understaning Ballantyne Strong Use of Financial Leverage
Leverage ratios show Ballantyne Strong'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 Ballantyne Strong'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).
Ballantyne Strong, Inc. operates in the entertainment industry worldwide. Ballantyne Strong, Inc. was founded in 1932 and is based in Charlotte, North Carolina. Ballantyne Strong operates under Leisure classification in the United States and is traded on AMEX Exchange. It employs 158 people. Please read more on our technical analysis page.
Pair Trading with Ballantyne Strong
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 Ballantyne Strong 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 Ballantyne Strong will appreciate offsetting losses from the drop in the long position's value.Moving against Ballantyne Stock
| 0.57 | BA | Boeing Fiscal Year End 29th of January 2025 | PairCorr |
| 0.4 | WMT | Walmart | PairCorr |
| 0.32 | AXP | American Express Fiscal Year End 24th of January 2025 | PairCorr |
The ability to find closely correlated positions to Ballantyne Strong could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Ballantyne Strong 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 Ballantyne Strong - 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 Ballantyne Strong to buy it.
The correlation of Ballantyne Strong 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 Ballantyne Strong moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Ballantyne Strong 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 Ballantyne Strong 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 Trending Equities 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 estimate. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Consideration for investing in Ballantyne Stock
If you are still planning to invest in Ballantyne Strong 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 Ballantyne Strong'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.