Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in Earnings Before Interest and Taxes (EBIT).
NeurogesX's Degree of Financial Leverage for the quarter that ended in Dec. 2011 was 0.00. The higher Degree of Financial Leverage, the more volatile earnings will be.
The industry rank for NeurogesX's Degree of Financial Leverage or its related term are showing as below:
NGSX's Degree of Financial Leverage is not ranked *
in the Drug Manufacturers industry.
Industry Median: 0.96 * Ranked among companies with meaningful Degree of Financial Leverage only.
NeurogesX Degree of Financial Leverage Historical Data
The historical data trend for NeurogesX's Degree of Financial Leverage can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of NeurogesX's Degree of Financial Leverage
For the Drug Manufacturers - Specialty & Generic subindustry, NeurogesX's Degree of Financial Leverage, along with its competitors' market caps and Degree of Financial Leverage data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
NeurogesX's Degree of Financial Leverage Distribution in the Drug Manufacturers Industry
For the Drug Manufacturers industry and Healthcare sector, NeurogesX's Degree of Financial Leverage distribution charts can be found below:
* The bar in red indicates where NeurogesX's Degree of Financial Leverage falls into.
NeurogesX Degree of Financial Leverage Calculation
NeurogesX's Degree of Financial Leverage for the quarter that ended in Dec. 2011 is calculated as:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
** TTM data of EPS and EBIT was used to calculate Degree of Financial Leverage.
*** Please be aware that the Degree of Financial Leverage calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
NeurogesX (OTCPK:NGSX) Degree of Financial Leverage Explanation
Degree of Financial Leverage (DFL) is a leverage ratio that measures the sensitivity of a company’s Earnings per Share (EPS) to fluctuations in its operating income, also referred to as Earnings Before Interest and Taxes (EBIT), resulting from adjustments in its capital structure. DFL is an essential tool for companies to assess the appropriate level of debt or financial leverage in their capital structure. When EBIT remains relatively stable, it results in stable earnings and earnings per share. In such cases, the company may consider taking on substantial debt. However, for companies operating in industries with significant fluctuations in EBIT, it is advisable to keep debt at a manageable level.
The higher Degree of Financial Leverage, the more volatile earnings will be. Because interest is a fixed expense, leverage can amplify earnings and EPS. This is beneficial when EBIT is growing, but it can become problematic in tough economic conditions when EBIT is under pressure.
Be Aware
The use of financial leverage varies across different industries and business sectors, and the application of Degree of Financial Leverage (DFL) should be adjusted accordingly.
NeurogesX Degree of Financial Leverage Related Terms
Thank you for viewing the detailed overview of NeurogesX's Degree of Financial Leverage provided by GuruFocus.com. Please click on the following links to see related term pages.
NeurogesX, Inc. was incorporated in California as Advanced Analgesics, Inc. on May 28, 1998 and changed its name to NeurogesX, Inc. in September 2000. In February 2007, it reincorporated into Delaware. It is a biopharmaceutical company focused on developing and commercializing novel pain management therapies. It is assembling a portfolio of pain management product candidates based on known chemical entities to develop innovative new therapies that might offer substantial advantages over currently available treatment options. The Company's initial focus is on the management of chronic peripheral neuropathic pain conditions. The Company's first commercial product, Qutenza, the first prescription strength capsaicin product is a dermal delivery system designed to treat certain neuropathic pain conditions and was approved by the U.S, Food and Drug Administration, or FDA in November 2009 for the management of neuropathic pain associated with postherpetic neuralgia, or PHN. It is currently preparing to commercialize Qutenza in the United States with its own sales force and that Qutenza would be commercially available in the United States in the first half of 2010. Qutenza is a non-narcotic analgesic formulated in a localized treatment patch containing an 8% concentration of synthetic capsaicin. Capsaicin is released from the patch and, with the aid of penetration enhancers, penetrates into the skin during application without significant absorption of capsaicin into the bloodstream. The users of Qutenza are unlikely to experience the common central nervous system side effects of systemically administered drugs used to treat neuropathic pain such as anti-convulsants, anti-depressants and opioids and the potential for abuse and addiction associated with some of these drugs. It is currently evaluating the nature, scope and timing of continued development of Qutenza to support the potential for label expansion in the United States. Areas of potential focus for label expansion include HIV-distal sensory neuropathy, or HIV-DSP, also known as HIV-associated neuropathy, or HIV-AN, painful diabetic neuropathy, or PDN, and potentially other neuropathic pain indications. It expects that Qutenza would compete against, and may be used in combination with, well-established products currently used both on and off-label in its target indications. The most directly competitive currently marketed products in the United States are Lidoderm, an FDA-approved 5% lidocaine topical patch for the treatment of PHN marketed by Endo Pharmaceuticals, and Lyrica, an oral anti-convulsant, marketed by Pfizer for use in the treatment of PHN. Regulation by governmental authorities in the United States and other countries is a significant factor in the development, manufacture and marketing of pharmaceuticals.
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