Tandem Diabetes Care Corporate Bonds and Leverage Analysis
| TNDM Stock | USD 42.40 0.36 0.84% |
Tandem Diabetes Care holds a debt-to-equity ratio of 1.0. At this time, Tandem Diabetes' Debt Equity Ratio is very stable compared to the past year. As of the 7th of September 2024, Debt Ratio is likely to grow to 0.44, while Short and Long Term Debt is likely to drop about 58.9 M. . Tandem Diabetes' financial risk is the risk to Tandem Diabetes stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Tandem Diabetes' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Tandem Diabetes' 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 Tandem Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Tandem Diabetes' stakeholders.
For most companies, including Tandem Diabetes, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Tandem Diabetes Care, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Tandem Diabetes' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 11.8768 | Book Value 3.574 | Operating Margin (0.14) | Profit Margin (0.17) | Return On Assets (0.10) |
Tandem |
Given the importance of Tandem Diabetes' capital structure, the first step in the capital decision process is for the management of Tandem Diabetes 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 Tandem Diabetes Care to issue bonds at a reasonable cost.
Tandem Diabetes Bond Ratings
Tandem Diabetes Care financial ratings play a critical role in determining how much Tandem Diabetes 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 Tandem Diabetes' borrowing costs.| Piotroski F Score | 2 | Frail | View |
| Beneish M Score | (3.46) | Unlikely Manipulator | View |
Tandem Diabetes Care Debt to Cash Allocation
Many companies such as Tandem Diabetes, 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.
Tandem Diabetes Care currently holds 415.67 M in liabilities with Debt to Equity (D/E) ratio of 1.0, which is about average as compared to similar companies. Tandem Diabetes Care has a current ratio of 4.7, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Tandem Diabetes' use of debt, we should always consider it together with its cash and equity.Tandem Diabetes Total Assets Over Time
Tandem Diabetes Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Tandem Diabetes 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.Tandem Diabetes Debt Ratio | 44.0 |
Tandem Diabetes Corporate Bonds Issued
Tandem Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Tandem Diabetes Use of Financial Leverage
Leverage ratios show Tandem Diabetes' 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 Tandem Diabetes' 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).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 415.7 M | 436.5 M | |
| Net Debt | 356.8 M | 374.6 M | |
| Short Term Debt | 17.1 M | 19.6 M | |
| Long Term Debt | 285 M | 158.5 M | |
| Long Term Debt Total | 323.7 M | 339.9 M | |
| Short and Long Term Debt | 88 M | 58.9 M | |
| Net Debt To EBITDA | (3.02) | (2.87) | |
| Debt To Equity | 1.33 | 1.39 | |
| Interest Debt Per Share | 6.51 | 6.19 | |
| Debt To Assets | 0.44 | 0.44 | |
| Long Term Debt To Capitalization | 0.56 | 0.44 | |
| Total Debt To Capitalization | 0.57 | 0.35 | |
| Debt Equity Ratio | 1.33 | 1.39 | |
| Debt Ratio | 0.44 | 0.44 | |
| Cash Flow To Debt Ratio | (0.08) | (0.08) |
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When determining whether Tandem Diabetes Care is a strong investment it is important to analyze Tandem Diabetes' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Tandem Diabetes' future performance. For an informed investment choice regarding Tandem Stock, refer to the following important reports:Check out the analysis of Tandem Diabetes Fundamentals Over Time. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Is Health Care Equipment & Supplies 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 Tandem Diabetes. If investors know Tandem 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 Tandem Diabetes 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 (0.37) | Earnings Share (2.07) | Revenue Per Share 12.208 | Quarterly Revenue Growth 0.133 | Return On Assets (0.10) |
The market value of Tandem Diabetes Care is measured differently than its book value, which is the value of Tandem that is recorded on the company's balance sheet. Investors also form their own opinion of Tandem Diabetes' value that differs from its market value or its book value, called intrinsic value, which is Tandem Diabetes' 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 Tandem Diabetes' market value can be influenced by many factors that don't directly affect Tandem Diabetes' 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 Tandem Diabetes' value and its price as these two are different measures arrived at by different means. Investors typically determine if Tandem Diabetes is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Tandem Diabetes' 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.