HMN Financial Corporate Bonds and Leverage Analysis
| HMNFDelisted Stock | USD 27.99 0.61 2.13% |
HMN Financial has over 13.51 Million in debt which may indicate that it relies heavily on debt financing. . HMN Financial's financial risk is the risk to HMN Financial stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
HMN Financial'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. HMN Financial'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 HMN Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect HMN Financial's stakeholders.
For most companies, including HMN Financial, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for HMN Financial, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, HMN Financial's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
HMN |
Given the importance of HMN Financial's capital structure, the first step in the capital decision process is for the management of HMN 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 HMN Financial to issue bonds at a reasonable cost.
HMN Financial Debt to Cash Allocation
Many companies such as HMN Financial, 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.
HMN Financial currently holds 13.51 M in liabilities with Debt to Equity (D/E) ratio of 8.24, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Note, when we think about HMN Financial's use of debt, we should always consider it together with its cash and equity.HMN Financial 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 HMN Financial's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of HMN Financial, which in turn will lower the firm's financial flexibility.HMN Financial Corporate Bonds Issued
Most HMN bonds can be classified according to their maturity, which is the date when HMN Financial 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.
Understaning HMN Financial Use of Financial Leverage
HMN Financial's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures HMN Financial's total debt position, including all outstanding debt obligations, and compares it with HMN Financial's equity. Financial leverage can amplify the potential profits to HMN Financial's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if HMN Financial is unable to cover its debt costs.
HMN Financial, Inc. operates as a bank holding company for Home Federal Savings Bank that provides various retail banking products and services. HMN Financial, Inc. was founded in 1934 and is headquartered in Rochester, Minnesota. Hmn Financial operates under BanksRegional classification in the United States and is traded on NASDAQ Exchange. It employs 168 people. Please read more on our technical analysis page.
Currently Active Assets on Macroaxis
Check out Risk vs Return Analysis to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in board of governors. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Consideration for investing in HMN Stock
If you are still planning to invest in HMN Financial check if it may still be traded through OTC markets such as Pink Sheets or OTC Bulletin Board. You may also purchase it directly from the company, but this is not always possible and may require contacting the company directly. Please note that delisted stocks are often considered to be more risky investments, as they are no longer subject to the same regulatory and reporting requirements as listed stocks. Therefore, it is essential to carefully research the HMN Financial's history and understand the potential risks before investing.
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |
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.