Intercorp Financial Corporate Bonds and Leverage Analysis
IFS Stock | USD 29.05 0.08 0.27% |
Intercorp Financial has over 10.88 Billion in debt which may indicate that it relies heavily on debt financing. At this time, Intercorp Financial's Net Debt is comparatively stable compared to the past year. Interest Debt Per Share is likely to gain to 121.39 in 2024, whereas Short and Long Term Debt Total is likely to drop slightly above 7.1 B in 2024. . Intercorp Financial's financial risk is the risk to Intercorp Financial stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Intercorp Financial'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. Intercorp Financial'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 Intercorp Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Intercorp Financial's stakeholders.
For most companies, including Intercorp Financial, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Intercorp Financial Services, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Intercorp Financial's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 1.2153 | Book Value 91.333 | Operating Margin 0.409 | Profit Margin 0.2634 | Return On Assets 0.0119 |
Intercorp |
Given the importance of Intercorp Financial's capital structure, the first step in the capital decision process is for the management of Intercorp Financial 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 Intercorp Financial Services to issue bonds at a reasonable cost.
Intercorp Financial Bond Ratings
Intercorp Financial Services financial ratings play a critical role in determining how much Intercorp Financial 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 Intercorp Financial's borrowing costs.Piotroski F Score | 5 | Healthy | View |
Beneish M Score | (3.73) | Unlikely Manipulator | View |
Intercorp Financial Debt to Cash Allocation
Many companies such as Intercorp Financial, 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.
Intercorp Financial Services has 10.88 B in debt with debt to equity (D/E) ratio of 7.31, demonstrating that the company may be unable to create cash to meet all of its financial commitments. Note however, debt could still be an excellent tool for Intercorp to invest in growth at high rates of return. Intercorp Financial Total Assets Over Time
Intercorp Financial Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Intercorp Financial 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.Intercorp Financial Debt Ratio | 9.6 |
Intercorp Financial Corporate Bonds Issued
Intercorp Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Intercorp Financial Use of Financial Leverage
Intercorp Financial's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Intercorp Financial's current equity. If creditors own a majority of Intercorp Financial's assets, the company is considered highly leveraged. Understanding the composition and structure of Intercorp Financial's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
Last Reported | Projected for Next Year | ||
Short and Long Term Debt Total | 10.9 B | 7.1 B | |
Net Debt | 8.4 B | 8.8 B | |
Short Term Debt | 2 B | 1.7 B | |
Long Term Debt | 8.8 B | 7.9 B | |
Long Term Debt Total | 9.1 B | 7.3 B | |
Short and Long Term Debt | 2 B | 1.8 B | |
Debt To Equity | 1.08 | 0.94 | |
Interest Debt Per Share | 115.61 | 121.39 | |
Debt To Assets | 0.12 | 0.10 | |
Long Term Debt To Capitalization | 0.47 | 0.38 | |
Total Debt To Capitalization | 0.52 | 0.41 | |
Debt Equity Ratio | 1.08 | 0.94 | |
Debt Ratio | 0.12 | 0.10 | |
Cash Flow To Debt Ratio | 0.27 | 0.25 |
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Additional Tools for Intercorp Stock Analysis
When running Intercorp Financial's price analysis, check to measure Intercorp Financial'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 Intercorp Financial is operating at the current time. Most of Intercorp Financial's value examination focuses on studying past and present price action to predict the probability of Intercorp Financial's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Intercorp Financial's price. Additionally, you may evaluate how the addition of Intercorp Financial 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.