Hampton Financial Corp 404280DR7 Bond
HFC Stock | CAD 0.45 0.01 2.17% |
Short and Long Term Debt is likely to climb to about 3.9 M in 2024. Short Term Debt is likely to climb to about 413.3 K in 2024. Hampton Financial's financial risk is the risk to Hampton Financial stockholders that is caused by an increase in debt.
At this time, Hampton Financial's Non Current Liabilities Total is fairly stable compared to the past year. Change To Liabilities is likely to climb to about 2.1 M in 2024, whereas Total Current Liabilities is likely to drop slightly above 1.8 M in 2024. Hampton |
Given the importance of Hampton Financial's capital structure, the first step in the capital decision process is for the management of Hampton 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 Hampton Financial Corp to issue bonds at a reasonable cost.
Popular Name | Hampton Financial HSBC Holdings PLC |
Specialization | Financial Services |
Equity ISIN Code | CA40915Q1028 |
Bond Issue ISIN Code | US404280DR76 |
S&P Rating | Others |
Maturity Date | 3rd of November 2028 |
Issuance Date | 3rd of November 2022 |
Coupon | 7.39 % |
Hampton Financial Corp Outstanding Bond Obligations
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Understaning Hampton Financial Use of Financial Leverage
Understanding the structure of Hampton Financial's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Hampton Financial's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
Last Reported | Projected for Next Year | ||
Short and Long Term Debt | 3.7 M | 3.9 M | |
Short Term Debt | 324 K | 413.3 K | |
Long Term Debt | 12 M | 12.6 M | |
Net Debt | 11.4 M | 12 M |
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When running Hampton Financial's price analysis, check to measure Hampton 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 Hampton Financial is operating at the current time. Most of Hampton Financial's value examination focuses on studying past and present price action to predict the probability of Hampton 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 Hampton Financial's price. Additionally, you may evaluate how the addition of Hampton 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.