First Merchants AerCap Bond
| FRME Stock | USD 44.97 0.92 2.09% |
First Merchants has over 871.5 Million in debt which may indicate that it relies heavily on debt financing. At present, First Merchants' Short Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Long Term Debt is expected to grow to about 915.1 M, whereas Short and Long Term Debt is forecasted to decline to about 244.9 M. . First Merchants' financial risk is the risk to First Merchants stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
First Merchants' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. First Merchants' 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 First Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect First Merchants' stakeholders.
For most companies, including First Merchants, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for First Merchants, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, First Merchants' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 1.1349 | Book Value 39.184 | Operating Margin 0.4158 | Profit Margin 0.3027 | Return On Assets 0.0099 |
First |
Given the importance of First Merchants' capital structure, the first step in the capital decision process is for the management of First Merchants 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 First Merchants to issue bonds at a reasonable cost.
| Popular Name | First Merchants AerCap Global Aviation |
| Specialization | Banks - Regional |
| Equity ISIN Code | US3208171096 |
| Bond Issue ISIN Code | US00773HAA59 |
| S&P Rating | Others |
| Maturity Date | 15th of June 2045 |
| Issuance Date | Others |
| Coupon | 6.5 % |
First Merchants Outstanding Bond Obligations
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Understaning First Merchants Use of Financial Leverage
First Merchants' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures First Merchants' total debt position, including all outstanding debt obligations, and compares it with First Merchants' equity. Financial leverage can amplify the potential profits to First Merchants' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if First Merchants is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 871.5 M | 915.1 M | |
| Net Debt | 322.8 M | 179.2 M | |
| Short Term Debt | 224 M | 282.6 M | |
| Long Term Debt | 871.5 M | 915.1 M | |
| Short and Long Term Debt | 263.7 M | 244.9 M | |
| Long Term Debt Total | 1.5 B | 1.6 B | |
| Net Debt To EBITDA | 2.80 | 2.88 | |
| Debt To Equity | 0.39 | 0.37 | |
| Interest Debt Per Share | 20.57 | 11.81 | |
| Debt To Assets | 0.05 | 0.09 | |
| Long Term Debt To Capitalization | 0.28 | 0.43 | |
| Total Debt To Capitalization | 0.28 | 0.44 | |
| Debt Equity Ratio | 0.39 | 0.37 | |
| Debt Ratio | 0.05 | 0.09 | |
| Cash Flow To Debt Ratio | 0.30 | 0.19 |
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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.When determining whether First Merchants 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 First 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 First Merchants Stock. Highlighted below are key reports to facilitate an investment decision about First Merchants Stock:Check out the analysis of First Merchants Fundamentals Over Time. For information on how to trade First Stock refer to our How to Trade First Stock guide.You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Is Regional Banks space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of First Merchants. If investors know First will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about First Merchants listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.11) | Dividend Share 1.38 | Earnings Share 3.01 | Revenue Per Share 10.11 | Quarterly Revenue Growth (0.05) |
The market value of First Merchants is measured differently than its book value, which is the value of First that is recorded on the company's balance sheet. Investors also form their own opinion of First Merchants' value that differs from its market value or its book value, called intrinsic value, which is First Merchants' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because First Merchants' market value can be influenced by many factors that don't directly affect First Merchants' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between First Merchants' value and its price as these two are different measures arrived at by different means. Investors typically determine if First Merchants is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, First Merchants' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
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.