WVS Financial Corp Corporate Bonds and Leverage Analysis
| WVFCDelisted Stock | USD 13.89 0.00 0.00% |
WVS Financial Corp has over 5 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 WVS Financial's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
WVS Financial'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. WVS Financial'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 WVS OTC Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect WVS Financial's stakeholders.
For most companies, including WVS Financial, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for WVS Financial Corp, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, WVS Financial's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
WVS |
Given the importance of WVS Financial's capital structure, the first step in the capital decision process is for the management of WVS Financial 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 WVS Financial Corp to issue bonds at a reasonable cost.
WVS Financial Corp Debt to Cash Allocation
WVS Financial Corp currently holds 5 M in liabilities with Debt to Equity (D/E) ratio of 9.15, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Debt can assist WVS Financial until it has trouble settling it off, either with new capital or with free cash flow. So, WVS Financial'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 WVS Financial Corp sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for WVS to invest in growth at high rates of return. When we think about WVS Financial's use of debt, we should always consider it together with cash and equity.WVS Financial 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 WVS Financial's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of WVS Financial, which in turn will lower the firm's financial flexibility.WVS Financial Corporate Bonds Issued
Most WVS bonds can be classified according to their maturity, which is the date when WVS Financial Corp has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Understaning WVS Financial Use of Financial Leverage
WVS Financial's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures WVS Financial's total debt position, including all outstanding debt obligations, and compares it with WVS Financial's equity. Financial leverage can amplify the potential profits to WVS Financial's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if WVS Financial is unable to cover its debt costs.
WVS Financial Corp. operates as the bank holding company for West View Savings Bank that provides various banking products and services in the United States. WVS Financial Corp. was founded in 1908 and is based in Pittsburgh, Pennsylvania. WVS Financial operates under BanksRegional classification in the United States and is traded on OTC Exchange. It employs 23 people. Please read more on our technical analysis page.
Also Currently Popular
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.Check out Your Current Watchlist to better understand how to build diversified portfolios. Also, note that the market value of any otc stock could be closely tied with the direction of predictive economic indicators such as signals in census. Note that the WVS Financial Corp information on this page should be used as a complementary analysis to other WVS Financial's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Consideration for investing in WVS OTC Stock
If you are still planning to invest in WVS Financial Corp 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 WVS Financial'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.