Green Plains Renewable Corporate Bonds and Leverage Analysis
| GPRE Stock | USD 11.32 0.23 2.07% |
Green Plains Renewable holds a debt-to-equity ratio of 0.898. At present, Green Plains' Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting. The current year's Short Term Debt is expected to grow to about 248.7 M, whereas Long Term Debt Total is forecasted to decline to about 369 M. . Green Plains' financial risk is the risk to Green Plains stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Green Plains' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Green Plains' 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 Green Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Green Plains' stakeholders.
For most companies, including Green Plains, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Green Plains Renewable, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Green Plains' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 0.7908 | Book Value 14.315 | Operating Margin 0.0385 | Profit Margin (0.01) | Return On Assets (0.01) |
Green |
Given the importance of Green Plains' capital structure, the first step in the capital decision process is for the management of Green Plains 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 Green Plains Renewable to issue bonds at a reasonable cost.
Green Plains Bond Ratings
Green Plains Renewable financial ratings play a critical role in determining how much Green Plains 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 Green Plains' borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | 0.34 | Possible Manipulator | View |
Green Plains Renewable Debt to Cash Allocation
Many companies such as Green Plains, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Green Plains Renewable currently holds 676.51 M in liabilities with Debt to Equity (D/E) ratio of 0.9, which is about average as compared to similar companies. Green Plains Renewable has a current ratio of 1.75, which is within standard range for the sector. Note, when we think about Green Plains' use of debt, we should always consider it together with its cash and equity.Green Plains Total Assets Over Time
Green Plains Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Green Plains 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.Green Plains Debt Ratio | 42.0 |
Green Plains Corporate Bonds Issued
Most Green bonds can be classified according to their maturity, which is the date when Green Plains Renewable has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Green Net Debt
Net Debt |
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Understaning Green Plains Use of Financial Leverage
Green Plains' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Green Plains' total debt position, including all outstanding debt obligations, and compares it with Green Plains' equity. Financial leverage can amplify the potential profits to Green Plains' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Green Plains is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Net Debt | 326.9 M | 328.5 M | |
| Short and Long Term Debt Total | 676.5 M | 694.1 M | |
| Long Term Debt | 491.9 M | 450.9 M | |
| Short Term Debt | 130.7 M | 248.7 M | |
| Long Term Debt Total | 462.6 M | 369 M | |
| Short and Long Term Debt | 107.8 M | 207.7 M | |
| Net Debt To EBITDA | 6.10 | 5.79 | |
| Debt To Equity | 0.71 | 1.07 | |
| Interest Debt Per Share | 10.84 | 15.02 | |
| Debt To Assets | 0.31 | 0.42 | |
| Long Term Debt To Capitalization | 0.37 | 0.42 | |
| Total Debt To Capitalization | 0.42 | 0.38 | |
| Debt Equity Ratio | 0.71 | 1.07 | |
| Debt Ratio | 0.31 | 0.42 | |
| Cash Flow To Debt Ratio | 0.09 | 0.14 |
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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 Green Plains Renewable is a strong investment it is important to analyze Green Plains' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Green Plains' future performance. For an informed investment choice regarding Green Stock, refer to the following important reports:Check out the analysis of Green Plains Fundamentals Over Time. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Is Oil & Gas Refining & Marketing 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 Green Plains. If investors know Green 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 Green Plains 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 0.977 | Earnings Share (0.31) | Revenue Per Share 41.372 | Quarterly Revenue Growth (0.26) | Return On Assets (0.01) |
The market value of Green Plains Renewable is measured differently than its book value, which is the value of Green that is recorded on the company's balance sheet. Investors also form their own opinion of Green Plains' value that differs from its market value or its book value, called intrinsic value, which is Green Plains' 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 Green Plains' market value can be influenced by many factors that don't directly affect Green Plains' 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 Green Plains' value and its price as these two are different measures arrived at by different means. Investors typically determine if Green Plains is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Green Plains' 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.