Gulf Keystone Petroleum 404280DR7 Bond
| GUKYF Stock | USD 1.85 0.05 2.78% |
Gulf Keystone Petroleum holds a debt-to-equity ratio of 0.203. . Gulf Keystone's financial risk is the risk to Gulf Keystone stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Gulf Keystone'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. Gulf Keystone'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 Gulf Pink Sheet's retail investors understand whether an upcoming fall or rise in the market will negatively affect Gulf Keystone's stakeholders.
For most companies, including Gulf Keystone, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Gulf Keystone Petroleum, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Gulf Keystone's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Gulf |
Given the importance of Gulf Keystone's capital structure, the first step in the capital decision process is for the management of Gulf Keystone 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 Gulf Keystone Petroleum to issue bonds at a reasonable cost.
| Popular Name | Gulf Keystone HSBC Holdings PLC |
| Equity ISIN Code | BMG4209G2077 |
| Bond Issue ISIN Code | US404280DR76 |
| S&P Rating | Others |
| Maturity Date | 3rd of November 2028 |
| Issuance Date | 3rd of November 2022 |
| Coupon | 7.39 % |
Gulf Keystone Petroleum Outstanding Bond Obligations
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Understaning Gulf Keystone Use of Financial Leverage
Gulf Keystone's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Gulf Keystone's total debt position, including all outstanding debt obligations, and compares it with Gulf Keystone's equity. Financial leverage can amplify the potential profits to Gulf Keystone's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Gulf Keystone is unable to cover its debt costs.
Gulf Keystone Petroleum Limited engages in the exploration, evaluation, and production of oil and gas properties in the Kurdistan Region of Iraq and the United Kingdom. The company was incorporated in 2001 and is based in Hamilton, Bermuda. Gulf Keystone is traded on OTC Exchange in the United States. Please read more on our technical analysis page.
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Other Information on Investing in Gulf Pink Sheet
Gulf Keystone financial ratios help investors to determine whether Gulf Pink Sheet is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Gulf with respect to the benefits of owning Gulf Keystone security.
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.