Humana AB 55336VAK6 Bond

HUM Stock  SEK 37.55  0.85  2.32%   
Humana AB has over 4.7 Billion in debt which may indicate that it relies heavily on debt financing. . Humana AB's financial risk is the risk to Humana AB stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Humana AB'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. Humana AB'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 Humana Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Humana AB's stakeholders.
For most companies, including Humana AB, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Humana AB, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Humana AB's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
  
Check out the analysis of Humana AB Fundamentals Over Time.
View Bond Profile
Given the importance of Humana AB's capital structure, the first step in the capital decision process is for the management of Humana AB 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 Humana AB to issue bonds at a reasonable cost.
Popular NameHumana AB MPLX LP 4125
Equity ISIN CodeSE0008040653
Bond Issue ISIN CodeUS55336VAK61
S&P Rating
Others
Maturity Date1st of March 2027
Issuance Date10th of February 2017
Coupon4.125 %
View All Humana AB Outstanding Bonds

Humana AB Outstanding Bond Obligations

Understaning Humana AB Use of Financial Leverage

Humana AB's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Humana AB's current equity. If creditors own a majority of Humana AB's assets, the company is considered highly leveraged. Understanding the composition and structure of Humana AB's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Humana AB , together with its subsidiaries, provides individual and family care services for children, adolescents, and adults in Sweden, Norway, Denmark, and Finland. Humana AB was founded in 2001 and is headquartered in Stockholm, Sweden. Humana AB operates under Personal Services classification in Sweden and is traded on Stockholm Stock Exchange. It employs 11238 people.
Please read more on our technical analysis page.

Thematic Opportunities

Explore Investment Opportunities

Build portfolios using Macroaxis predefined set of investing ideas. Many of Macroaxis investing ideas can easily outperform a given market. Ideas can also be optimized per your risk profile before portfolio origination is invoked. Macroaxis thematic optimization helps investors identify companies most likely to benefit from changes or shifts in various micro-economic or local macro-level trends. Originating optimal thematic portfolios involves aligning investors' personal views, ideas, and beliefs with their actual investments.
Explore Investing Ideas  

Additional Tools for Humana Stock Analysis

When running Humana AB's price analysis, check to measure Humana AB'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 Humana AB is operating at the current time. Most of Humana AB's value examination focuses on studying past and present price action to predict the probability of Humana AB's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Humana AB's price. Additionally, you may evaluate how the addition of Humana AB to your portfolios can decrease your overall portfolio volatility.

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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.