Middlefield Banc Corporate Bonds and Leverage Analysis
| MBCN Stock | USD 26.29 0.04 0.15% |
Middlefield Banc has over 175.43 Million in debt which may indicate that it relies heavily on debt financing. With a high degree of financial leverage come high-interest payments, which usually reduce Middlefield Banc's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Middlefield Banc'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. Middlefield Banc'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 Middlefield Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Middlefield Banc's stakeholders.
For most companies, including Middlefield Banc, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Middlefield Banc, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Middlefield Banc's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Middlefield |
Given the importance of Middlefield Banc's capital structure, the first step in the capital decision process is for the management of Middlefield Banc 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 Middlefield Banc to issue bonds at a reasonable cost.
Middlefield Banc Bond Ratings
Middlefield Banc financial ratings play a critical role in determining how much Middlefield Banc 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 Middlefield Banc's borrowing costs.| Piotroski F Score | 4 | Poor | View |
| Beneish M Score | (2.32) | Unlikely Manipulator | View |
Middlefield Banc Debt to Cash Allocation
As Middlefield Banc follows its natural business cycle, the capital allocation decisions will not magically go away. Middlefield Banc'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.
Middlefield Banc currently holds 175.43 M in liabilities with Debt to Equity (D/E) ratio of 10.8, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Note, when we think about Middlefield Banc's use of debt, we should always consider it together with its cash and equity.Middlefield Banc 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 Middlefield Banc's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Middlefield Banc, which in turn will lower the firm's financial flexibility.Middlefield Banc Corporate Bonds Issued
Understaning Middlefield Banc Use of Financial Leverage
Leverage ratios show Middlefield Banc'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 Middlefield Banc'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).
Middlefield Banc Corp. operates as the bank holding company for The Middlefield Banking Company that provides various commercial banking services to small and medium-sized businesses, professionals, small business owners, and retail customers in northeastern and central Ohio. Middlefield Banc Corp. was founded in 1901 and is headquartered in Middlefield, Ohio. Middlefield Banc operates under BanksRegional classification in the United States and is traded on NASDAQ Exchange. It employs 185 people. Please read more on our technical analysis page.
When determining whether Middlefield Banc offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Middlefield Banc's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Middlefield Banc Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Middlefield Banc Stock: Check out the analysis of Middlefield Banc Fundamentals Over Time. To learn how to invest in Middlefield Stock, please use our How to Invest in Middlefield Banc guide.You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Is Regional Banks space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Middlefield Banc. If investors know Middlefield will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Middlefield Banc listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Middlefield Banc is measured differently than its book value, which is the value of Middlefield that is recorded on the company's balance sheet. Investors also form their own opinion of Middlefield Banc's value that differs from its market value or its book value, called intrinsic value, which is Middlefield Banc's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Middlefield Banc's market value can be influenced by many factors that don't directly affect Middlefield Banc's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Middlefield Banc's value and its price as these two are different measures arrived at by different means. Investors typically determine if Middlefield Banc is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Middlefield Banc's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
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.