Technip Energies Volcan Bond
| TE Stock | EUR 26.02 0.72 2.85% |
Technip Energies holds a debt-to-equity ratio of 0.803. With a high degree of financial leverage come high-interest payments, which usually reduce Technip Energies' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Technip Energies' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Technip Energies' 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 Technip Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Technip Energies' stakeholders.
For most companies, including Technip Energies, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Technip Energies BV, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Technip Energies' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Technip |
Given the importance of Technip Energies' capital structure, the first step in the capital decision process is for the management of Technip Energies 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 Technip Energies BV to issue bonds at a reasonable cost.
| Popular Name | Technip Energies Volcan Compania Minera |
| Equity ISIN Code | NL0014559478 |
| Bond Issue ISIN Code | USP98047AC08 |
| S&P Rating | Others |
| Maturity Date | 11th of February 2026 |
| Issuance Date | 11th of February 2021 |
| Coupon | 4.375 % |
Technip Energies Outstanding Bond Obligations
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Understaning Technip Energies Use of Financial Leverage
Technip Energies' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Technip Energies' total debt position, including all outstanding debt obligations, and compares it with Technip Energies' equity. Financial leverage can amplify the potential profits to Technip Energies' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Technip Energies is unable to cover its debt costs.
Technip Energies B.V. operates as an engineering technology company for the energy transition in Europe, Russia, the Asia Pacific, Africa, the Middle East, and the Americas. The company was incorporated in 2019 and is headquartered in Paris, France. TECHNIP ENERGIES operates under Oil Gas Equipment Services classification in France and is traded on Paris Stock Exchange. It employs 15000 people. Please read more on our technical analysis page.
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Technip Energies financial ratios help investors to determine whether Technip 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 Technip with respect to the benefits of owning Technip Energies 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.