Jeronimo Martins SGPS Volcan Bond
| JRONY Stock | USD 38.64 0.43 1.13% |
Jeronimo Martins SGPS holds a debt-to-equity ratio of 1.307. With a high degree of financial leverage come high-interest payments, which usually reduce Jeronimo Martins' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Jeronimo Martins' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Jeronimo Martins' 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 Jeronimo Pink Sheet's retail investors understand whether an upcoming fall or rise in the market will negatively affect Jeronimo Martins' stakeholders.
For most companies, including Jeronimo Martins, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Jeronimo Martins SGPS, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Jeronimo Martins' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Jeronimo |
Given the importance of Jeronimo Martins' capital structure, the first step in the capital decision process is for the management of Jeronimo Martins 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 Jeronimo Martins SGPS to issue bonds at a reasonable cost.
| Popular Name | Jeronimo Martins Volcan Compania Minera |
| Equity ISIN Code | US4764931014 |
| Bond Issue ISIN Code | USP98047AC08 |
| S&P Rating | Others |
| Maturity Date | 11th of February 2026 |
| Issuance Date | 11th of February 2021 |
| Coupon | 4.375 % |
Jeronimo Martins SGPS Outstanding Bond Obligations
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| Volcan Compania Minera | USP98047AC08 | Details | |
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| HSBC Holdings PLC | US404280DR76 | Details | |
| MPLX LP 52 | US55336VAL45 | Details | |
| Morgan Stanley 3591 | US61744YAK47 | Details |
Understaning Jeronimo Martins Use of Financial Leverage
Understanding the structure of Jeronimo Martins' debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Jeronimo Martins' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Jernimo Martins, SGPS, S.A. operates in the food distribution and specialized retail sectors in Portugal, Poland, and Colombia. Jernimo Martins, SGPS, S.A. is a subsidiary of Sociedade Francisco Manuel dos Santos, SGPS, S.E. Jeronimo Martins operates under Food Distribution classification in the United States and is traded on OTC Exchange. It employs 104392 people. Please read more on our technical analysis page.
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When running Jeronimo Martins' price analysis, check to measure Jeronimo Martins' 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 Jeronimo Martins is operating at the current time. Most of Jeronimo Martins' value examination focuses on studying past and present price action to predict the probability of Jeronimo Martins' future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Jeronimo Martins' price. Additionally, you may evaluate how the addition of Jeronimo Martins 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.