BP plc Boeing Bond
BSU Stock | EUR 28.60 0.20 0.70% |
BP Plc'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. BP Plc's financial risk is the risk to BP Plc 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).
BSU |
Given the importance of BP Plc's capital structure, the first step in the capital decision process is for the management of BP Plc 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 BP plc to issue bonds at a reasonable cost.
Popular Name | BP Plc Boeing Co 2196 |
Equity ISIN Code | US0556221044 |
Bond Issue ISIN Code | US097023DG73 |
S&P Rating | Others |
Maturity Date | 4th of February 2026 |
Issuance Date | 4th of February 2021 |
Coupon | 2.196 % |
BP plc Outstanding Bond Obligations
Boeing Co 2196 | US097023DG73 | Details | |
BNP 775 | US05565AM341 | Details | |
BNP 45 | US05565ALQ49 | Details | |
US05567SAA06 | US05567SAA06 | Details | |
BNP 4375 12 MAY 26 | US05565AAR41 | Details | |
BNP 4625 | US05565AB286 | Details | |
BNP 7375 | US05565AAN37 | Details | |
BNP 925 | US05565AS207 | Details | |
BMW 33 06 APR 27 | US05565EAT29 | Details | |
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BMW 28 11 APR 26 | US05565EAH80 | Details | |
BMW 325 01 APR 25 | US05565EBZ79 | Details | |
BMW 125 12 AUG 26 | US05565EBW49 | Details | |
BMW 195 12 AUG 31 | US05565EBX22 | Details | |
BMW 255 01 APR 31 | US05565EBS37 | Details | |
BMW 37 01 APR 32 | US05565ECB92 | Details | |
BMW 345 01 APR 27 | US05565ECA10 | Details | |
BMW 395 14 AUG 28 | US05565EBE41 | Details | |
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BMW 39 09 APR 25 | US05565EBK01 | Details | |
BMW 3625 18 APR 29 | US05565EBJ38 | Details | |
Morgan Stanley 3591 | US61744YAK47 | Details | |
Morgan Stanley 3971 | US61744YAL20 | Details | |
US05565QDU94 | US05565QDU94 | Details | |
BP CAP MKTS | US05565QDH83 | Details | |
BP CAP MKTS | US05565QDN51 | Details | |
BP CAP MKTS | US05565QDM78 | Details |
Understaning BP Plc Use of Financial Leverage
BP Plc's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures BP Plc's total debt position, including all outstanding debt obligations, and compares it with BP Plc's equity. Financial leverage can amplify the potential profits to BP Plc's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if BP Plc is unable to cover its debt costs.
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Other Information on Investing in BSU Stock
BP Plc financial ratios help investors to determine whether BSU Stock is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in BSU with respect to the benefits of owning BP Plc security.
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.