Boeing Current Debt
| BOEI34 Stock | BRL 1,114 22.28 2.04% |
Boeing's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Boeing's financial risk is the risk to Boeing 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).
Given that Boeing'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 Boeing 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 Boeing to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Boeing is said to be less leveraged. If creditors hold a majority of Boeing's assets, the Company is said to be highly leveraged.
Boeing |
Boeing Debt to Cash Allocation
The Boeing has accumulated 51.67 B in total debt. Boeing has a current ratio of 1.32, which is within standard range for the sector. Debt can assist Boeing until it has trouble settling it off, either with new capital or with free cash flow. So, Boeing'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 Boeing sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Boeing to invest in growth at high rates of return. When we think about Boeing's use of debt, we should always consider it together with cash and equity.Boeing 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 Boeing's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Boeing, which in turn will lower the firm's financial flexibility.Understaning Boeing Use of Financial Leverage
Boeing's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Boeing's total debt position, including all outstanding debt obligations, and compares it with Boeing's equity. Financial leverage can amplify the potential profits to Boeing's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Boeing is unable to cover its debt costs.
The Boeing Company, together with its subsidiaries, designs, develops, manufactures, sales, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide. The company was founded in 1916 and is based in Chicago, Illinois. BOEING DRN operates under Aerospace Defense classification in Brazil and is traded on Sao Paolo Stock Exchange. It employs 141000 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.Additional Information and Resources on Investing in Boeing Stock
When determining whether Boeing offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Boeing's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of The Boeing Stock. Outlined below are crucial reports that will aid in making a well-informed decision on The Boeing Stock:Check out the analysis of Boeing Fundamentals Over Time. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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.