Boston Properties Current Debt
| BOXP34 Stock | BRL 49.90 0.87 1.77% |
Boston Properties has over 12.75 Billion in debt which may indicate that it relies heavily on debt financing. With a high degree of financial leverage come high-interest payments, which usually reduce Boston Properties' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Boston Properties' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Boston Properties' 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 Boston Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Boston Properties' stakeholders.
For most companies, including Boston Properties, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Boston Properties, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Boston Properties' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Given that Boston Properties' 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 Boston Properties 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 Boston Properties to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Boston Properties is said to be less leveraged. If creditors hold a majority of Boston Properties' assets, the Company is said to be highly leveraged.
Boston |
Boston Properties Debt to Cash Allocation
Boston Properties has accumulated 12.75 B in total debt with debt to equity ratio (D/E) of 152.3, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Boston Properties has a current ratio of 3.48, suggesting that it is liquid and has the ability to pay its financial obligations in time and when they become due. Debt can assist Boston Properties until it has trouble settling it off, either with new capital or with free cash flow. So, Boston Properties' shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Boston Properties sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Boston to invest in growth at high rates of return. When we think about Boston Properties' use of debt, we should always consider it together with cash and equity.Boston Properties Assets Financed by Debt
Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Boston Properties' operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Boston Properties, which in turn will lower the firm's financial flexibility.Understaning Boston Properties Use of Financial Leverage
Boston Properties' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Boston Properties' total debt position, including all outstanding debt obligations, and compares it with Boston Properties' equity. Financial leverage can amplify the potential profits to Boston Properties' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Boston Properties is unable to cover its debt costs.
Boston Properties is the largest publicly-held developer and owner of Class A office properties in the United States, concentrated in five markets - Boston, Los Angeles, New York, San Francisco and Washington, DC. The Companys portfolio totals 50.9 million square feet and 193 properties, including eleven properties under construction. BOSTON PROP operates under REIT - Office classification in Brazil and is traded on Sao Paolo Stock Exchange. It employs 760 people. Please read more on our technical analysis page.
Also Currently Popular
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.Additional Information and Resources on Investing in Boston Stock
When determining whether Boston Properties is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if Boston Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Boston Properties Stock. Highlighted below are key reports to facilitate an investment decision about Boston Properties Stock:Check out the analysis of Boston Properties Fundamentals Over Time. For information on how to trade Boston Stock refer to our How to Trade Boston Stock guide.You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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.