Credit Acceptance Bonds
| CACC Stock | USD 522.26 3.08 0.59% |
Credit Acceptance has over 5.07 Billion in debt which may indicate that it relies heavily on debt financing. At present, Credit Acceptance's Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt is expected to grow to about 5.3 B, whereas Short Term Debt is forecasted to decline to about 70.4 M. Credit Acceptance's financial risk is the risk to Credit Acceptance stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Credit Acceptance'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. Credit Acceptance'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 Credit Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Credit Acceptance's stakeholders.
Credit Acceptance Quarterly Net Debt |
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For most companies, including Credit Acceptance, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Credit Acceptance the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book 3.8966 | Book Value 140.045 | Operating Margin 0.4745 | Profit Margin 0.3182 | Return On Assets 0.0394 |
Given that Credit Acceptance's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Credit Acceptance 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 Credit Acceptance to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Credit Acceptance is said to be less leveraged. If creditors hold a majority of Credit Acceptance's assets, the Company is said to be highly leveraged.
At present, Credit Acceptance's Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt is expected to grow to about 5.3 B, whereas Short Term Debt is forecasted to decline to about 70.4 M. Credit |
Credit Acceptance Bond Ratings
Credit Acceptance bond ratings play a critical role in determining how much Credit Acceptance 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 Credit Acceptance's borrowing costs.| Piotroski F Score | 4 Poor |
| Beneish M Score | -3.02 Unlikely Manipulator |
Credit Acceptance Debt to Cash Allocation
As Credit Acceptance follows its natural business cycle, the capital allocation decisions will not magically go away. Credit Acceptance'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. Many companies 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.
The company currently holds 5.07 B in liabilities with Debt to Equity (D/E) ratio of 3.15, implying the company greatly relies on financing operations through barrowing. Credit Acceptance has a current ratio of 29.55, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Credit Acceptance until it has trouble settling it off, either with new capital or with free cash flow. So, Credit Acceptance'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 Credit Acceptance sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Credit to invest in growth at high rates of return. When we think about Credit Acceptance's use of debt, we should always consider it together with cash and equity.Credit Acceptance Total Assets Over Time
Credit Acceptance 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 Credit Acceptance's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Credit Acceptance, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a Credit Acceptance debt ratio should be compared their industry average or other competing firms.Credit Acceptance Corporate Bonds Issued
Credit Acceptance issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Credit Acceptance uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt. Most Credit bonds can be classified according to their maturity, which is the date when Credit Acceptance 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.
Credit Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Credit Acceptance Use of Financial Leverage
Credit Acceptance financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Credit Acceptance's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Credit Acceptance assets, the company is considered highly leveraged. Understanding the composition and structure of overall Credit Acceptance debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to Credit Acceptance's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Credit Acceptance'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).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 5.1 B | 5.3 B | |
| Net Debt | 5.1 B | 5.3 B | |
| Short Term Debt | 74.1 M | 70.4 M | |
| Long Term Debt | 5.1 B | 5.3 B | |
| Long Term Debt Total | 5.2 B | 3.1 B | |
| Short and Long Term Debt | 2.3 M | 2.2 M | |
| Net Debt To EBITDA | 13.75 | 7.10 | |
| Debt To Equity | 2.93 | 3.08 | |
| Interest Debt Per Share | 415.51 | 436.29 | |
| Debt To Assets | 0.68 | 0.37 | |
| Long Term Debt To Capitalization | 0.74 | 0.42 | |
| Total Debt To Capitalization | 0.75 | 0.45 | |
| Debt Equity Ratio | 2.93 | 3.08 | |
| Debt Ratio | 0.68 | 0.37 | |
| Cash Flow To Debt Ratio | 0.23 | 0.22 |
Credit Acceptance Investors Sentiment
The influence of Credit Acceptance's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Credit. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock market does not have solid backing from leading economists and market statisticians.
Investor biases related to Credit Acceptance's public news can be used to forecast risks associated with an investment in Credit. The trend in average sentiment can be used to explain how an investor holding Credit can time the market purely based on public headlines and social activities around Credit Acceptance. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
Credit Acceptance's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Credit Acceptance's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Credit Acceptance's news discussions. The higher the estimated score, the more favorable is the investor's outlook on Credit Acceptance.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Credit Acceptance in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Credit Acceptance's short interest history, or implied volatility extrapolated from Credit Acceptance options trading.
Pair Trading with Credit Acceptance
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 Credit Acceptance 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 Credit Acceptance will appreciate offsetting losses from the drop in the long position's value.The ability to find closely correlated positions to Credit Acceptance could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Credit Acceptance 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 Credit Acceptance - 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 Credit Acceptance to buy it.
The correlation of Credit Acceptance 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 Credit Acceptance moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Credit Acceptance 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 Credit Acceptance 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 the analysis of Credit Acceptance Fundamentals Over Time. For information on how to trade Credit Stock refer to our How to Trade Credit Stock guide.Note that the Credit Acceptance information on this page should be used as a complementary analysis to other Credit Acceptance'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 Global Correlations module to find global opportunities by holding instruments from different markets.
Complementary Tools for Credit Stock analysis
When running Credit Acceptance's price analysis, check to measure Credit Acceptance's 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 Credit Acceptance is operating at the current time. Most of Credit Acceptance's value examination focuses on studying past and present price action to predict the probability of Credit Acceptance's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Credit Acceptance's price. Additionally, you may evaluate how the addition of Credit Acceptance to your portfolios can decrease your overall portfolio volatility.
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Is Credit Acceptance's industry 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 Credit Acceptance. If investors know Credit 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 Credit Acceptance listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.24) | Earnings Share 21.99 | Revenue Per Share 69.418 | Quarterly Revenue Growth (0.11) | Return On Assets 0.0394 |
The market value of Credit Acceptance is measured differently than its book value, which is the value of Credit that is recorded on the company's balance sheet. Investors also form their own opinion of Credit Acceptance's value that differs from its market value or its book value, called intrinsic value, which is Credit Acceptance'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 Credit Acceptance's market value can be influenced by many factors that don't directly affect Credit Acceptance'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 Credit Acceptance's value and its price as these two are different measures arrived at by different means. Investors typically determine if Credit Acceptance is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Credit Acceptance'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.