IGM Biosciences Corporate Bonds and Leverage Analysis

IGMS Stock  USD 9.49  0.67  6.59%   
IGM Biosciences holds a debt-to-equity ratio of 0.085. At this time, IGM Biosciences' Short and Long Term Debt is comparatively stable compared to the past year. Net Debt To EBITDA is likely to gain to 0.54 in 2024, whereas Short Term Debt is likely to drop slightly above 5.8 M in 2024. . IGM Biosciences' financial risk is the risk to IGM Biosciences stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

IGM Biosciences' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. IGM Biosciences' 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 IGM Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect IGM Biosciences' stakeholders.
For most companies, including IGM Biosciences, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for IGM Biosciences, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, IGM Biosciences' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
7.148
Book Value
1.328
Operating Margin
(124.78)
Return On Assets
(0.37)
Return On Equity
(1.32)
At this time, IGM Biosciences' Liabilities And Stockholders Equity is comparatively stable compared to the past year. Non Current Liabilities Total is likely to gain to about 186.6 M in 2024, whereas Total Current Liabilities is likely to drop slightly above 23.7 M in 2024.
  
Check out the analysis of IGM Biosciences Fundamentals Over Time.
For more information on how to buy IGM Stock please use our How to Invest in IGM Biosciences guide.
View Bond Profile
Given the importance of IGM Biosciences' capital structure, the first step in the capital decision process is for the management of IGM Biosciences 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 IGM Biosciences to issue bonds at a reasonable cost.

IGM Biosciences Bond Ratings

IGM Biosciences financial ratings play a critical role in determining how much IGM Biosciences have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for IGM Biosciences' borrowing costs.
Piotroski F Score
4
PoorView
Beneish M Score
(3.41)
Unlikely ManipulatorView

IGM Biosciences Debt to Cash Allocation

Many companies such as IGM Biosciences, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
IGM Biosciences currently holds 40.51 M in liabilities with Debt to Equity (D/E) ratio of 0.09, which may suggest the company is not taking enough advantage from borrowing. IGM Biosciences has a current ratio of 10.57, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about IGM Biosciences' use of debt, we should always consider it together with its cash and equity.

IGM Biosciences Total Assets Over Time

IGM Biosciences Assets Financed by Debt

The debt-to-assets ratio shows the degree to which IGM Biosciences 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.

IGM Biosciences Debt Ratio

    
  1.31   
It appears most of the IGM Biosciences' assets are financed through equity. 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 IGM Biosciences' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of IGM Biosciences, which in turn will lower the firm's financial flexibility.

IGM Biosciences Corporate Bonds Issued

IGM Net Debt

Net Debt

(75.61 Million)

At this time, IGM Biosciences' Net Debt is comparatively stable compared to the past year.

Understaning IGM Biosciences Use of Financial Leverage

IGM Biosciences' financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to IGM Biosciences' current equity. If creditors own a majority of IGM Biosciences' assets, the company is considered highly leveraged. Understanding the composition and structure of IGM Biosciences' outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Last ReportedProjected for Next Year
Net Debt-72 M-75.6 M
Short and Long Term Debt5.8 M6.1 M
Short Term Debt5.8 M5.8 M
Short and Long Term Debt Total40.5 M26.1 M
Net Debt To EBITDA 0.28  0.54 
Debt To Equity 0.03  0.03 
Interest Debt Per Share 0.11  0.11 
Debt To Assets 0.01  0.01 
Total Debt To Capitalization 0.03  0.03 
Debt Equity Ratio 0.03  0.03 
Debt Ratio 0.01  0.01 
Cash Flow To Debt Ratio(32.95)(34.60)
Please read more on our technical analysis page.

Thematic Opportunities

Explore Investment Opportunities

Build portfolios using Macroaxis predefined set of investing ideas. Many of Macroaxis investing ideas can easily outperform a given market. Ideas can also be optimized per your risk profile before portfolio origination is invoked. Macroaxis thematic optimization helps investors identify companies most likely to benefit from changes or shifts in various micro-economic or local macro-level trends. Originating optimal thematic portfolios involves aligning investors' personal views, ideas, and beliefs with their actual investments.
Explore Investing Ideas  

Additional Tools for IGM Stock Analysis

When running IGM Biosciences' price analysis, check to measure IGM Biosciences' 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 IGM Biosciences is operating at the current time. Most of IGM Biosciences' value examination focuses on studying past and present price action to predict the probability of IGM Biosciences' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move IGM Biosciences' price. Additionally, you may evaluate how the addition of IGM Biosciences 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.