Odyssey Semiconductor Current Debt
| ODII Stock | USD 0.02 0.04 69.23% |
Odyssey Semiconductor holds a debt-to-equity ratio of 0.776. With a high degree of financial leverage come high-interest payments, which usually reduce Odyssey Semiconductor's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Odyssey Semiconductor'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. Odyssey Semiconductor's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the OTC Stock is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Odyssey OTC Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Odyssey Semiconductor's stakeholders.
For most companies, including Odyssey Semiconductor, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Odyssey Semiconductor Technologies, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Odyssey Semiconductor's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Odyssey Semiconductor's debt-to-equity ratio measures a OTC Stock's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Odyssey Semiconductor is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Odyssey Semiconductor to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Odyssey Semiconductor is said to be less leveraged. If creditors hold a majority of Odyssey Semiconductor's assets, the OTC Stock is said to be highly leveraged.
Odyssey |
Odyssey Semiconductor Debt to Cash Allocation
Odyssey Semiconductor Technologies currently holds 3.86 M in liabilities with Debt to Equity (D/E) ratio of 0.78, which is about average as compared to similar companies. Odyssey Semiconductor has a current ratio of 1.29, suggesting that it may not be capable to disburse its financial obligations when due. Debt can assist Odyssey Semiconductor until it has trouble settling it off, either with new capital or with free cash flow. So, Odyssey Semiconductor's 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 Odyssey Semiconductor sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Odyssey to invest in growth at high rates of return. When we think about Odyssey Semiconductor's use of debt, we should always consider it together with cash and equity.Odyssey Semiconductor 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 Odyssey Semiconductor's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Odyssey Semiconductor, which in turn will lower the firm's financial flexibility.Understaning Odyssey Semiconductor Use of Financial Leverage
Understanding the composition and structure of Odyssey Semiconductor's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Odyssey Semiconductor's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Odyssey Semiconductor Technologies, Inc., a semiconductor device company, develops and sells high-voltage power switching components and systems based on proprietary gallium nitride processing technology. The company was incorporated in 2019 and is based in Ithaca, New York. Odyssey Semiconductor operates under Semiconductors classification in the United States and is traded on OTC Exchange. It employs 11 people. Please read more on our technical analysis page.
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Odyssey Semiconductor financial ratios help investors to determine whether Odyssey OTC Stock is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Odyssey with respect to the benefits of owning Odyssey Semiconductor security.
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.