Canadian Pacific Debt
| CP Stock | USD 76.59 1.24 1.65% |
Canadian Pacific Railway holds a debt-to-equity ratio of 0.544. At this time, Canadian Pacific's Long Term Debt To Capitalization is relatively stable compared to the past year. As of 11/30/2024, Total Debt To Capitalization is likely to grow to 0.37, while Debt To Assets are likely to drop 0.26. . Canadian Pacific's financial risk is the risk to Canadian Pacific stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Canadian Pacific'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. Canadian Pacific'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 Canadian Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Canadian Pacific's stakeholders.
Canadian Pacific Quarterly Net Debt |
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For most companies, including Canadian Pacific, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Canadian Pacific Railway, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Canadian Pacific'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 2.2392 | Book Value 47.298 | Operating Margin 0.3742 | Profit Margin 0.245 | Return On Assets 0.044 |
Given that Canadian Pacific's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Canadian Pacific is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Canadian Pacific to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Canadian Pacific is said to be less leveraged. If creditors hold a majority of Canadian Pacific's assets, the Company is said to be highly leveraged.
At this time, Canadian Pacific's Total Current Liabilities is relatively stable compared to the past year. As of 11/30/2024, Liabilities And Stockholders Equity is likely to grow to about 83.9 B, while Non Current Liabilities Other is likely to drop slightly above 104.5 M. Canadian |
Canadian Pacific Bond Ratings
Canadian Pacific Railway financial ratings play a critical role in determining how much Canadian Pacific 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 Canadian Pacific's borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (2.38) | Unlikely Manipulator | View |
Canadian Pacific Railway Debt to Cash Allocation
Canadian Pacific Railway reports 22.84 B of total liabilities with total debt to equity ratio (D/E) of 0.54, which is normal for its line of buisiness. Canadian Pacific Railway has a current ratio of 0.57, implying that it has not enough working capital to pay out debt commitments in time. Note however, debt could still be an excellent tool for Canadian to invest in growth at high rates of return.Canadian Pacific Total Assets Over Time
Canadian Pacific Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Canadian Pacific 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.Canadian Pacific Debt Ratio | 26.0 |
Canadian Pacific Corporate Bonds Issued
Canadian Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Canadian Pacific Use of Financial Leverage
Canadian Pacific's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Canadian Pacific's current equity. If creditors own a majority of Canadian Pacific's assets, the company is considered highly leveraged. Understanding the composition and structure of Canadian Pacific'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 | 22.8 B | 24 B | |
| Net Debt | 22.4 B | 23.5 B | |
| Short Term Debt | 3.2 B | 3.4 B | |
| Long Term Debt | 19.4 B | 20.3 B | |
| Short and Long Term Debt | 3.1 B | 3.3 B | |
| Long Term Debt Total | 21.4 B | 10.8 B | |
| Net Debt To EBITDA | (30.61) | (29.08) | |
| Debt To Equity | 0.54 | 0.74 | |
| Interest Debt Per Share | 24.95 | 26.20 | |
| Debt To Assets | 0.28 | 0.26 | |
| Long Term Debt To Capitalization | 0.32 | 0.36 | |
| Total Debt To Capitalization | 0.35 | 0.37 | |
| Debt Equity Ratio | 0.54 | 0.74 | |
| Debt Ratio | 0.28 | 0.26 | |
| Cash Flow To Debt Ratio | 0.18 | 0.30 |
Pair Trading with Canadian Pacific
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Canadian Pacific position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canadian Pacific will appreciate offsetting losses from the drop in the long position's value.Moving together with Canadian Stock
Moving against Canadian Stock
| 0.92 | AZ | A2Z Smart Technologies | PairCorr |
| 0.91 | AAL | American Airlines Aggressive Push | PairCorr |
| 0.83 | ALK | Alaska Air Group Fiscal Year End 23rd of January 2025 | PairCorr |
| 0.83 | B | Barnes Group | PairCorr |
| 0.81 | VLRS | Volaris | PairCorr |
The ability to find closely correlated positions to Canadian Pacific could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Canadian Pacific when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Canadian Pacific - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Canadian Pacific Railway to buy it.
The correlation of Canadian Pacific is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Canadian Pacific moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Canadian Pacific Railway moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Canadian Pacific can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Additional Tools for Canadian Stock Analysis
When running Canadian Pacific's price analysis, check to measure Canadian Pacific'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 Canadian Pacific is operating at the current time. Most of Canadian Pacific's value examination focuses on studying past and present price action to predict the probability of Canadian Pacific's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Canadian Pacific's price. Additionally, you may evaluate how the addition of Canadian Pacific 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.