AerCap Holdings NV 404280DR7 Bond
| R1D Stock | EUR 93.60 0.14 0.15% |
AerCap Holdings NV has over 50.2 Billion in debt which may indicate that it relies heavily on debt financing. . AerCap Holdings' financial risk is the risk to AerCap Holdings stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
AerCap Holdings' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. AerCap Holdings' 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 AerCap Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect AerCap Holdings' stakeholders.
For most companies, including AerCap Holdings, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for AerCap Holdings NV, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, AerCap Holdings' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
AerCap |
Given the importance of AerCap Holdings' capital structure, the first step in the capital decision process is for the management of AerCap Holdings 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 AerCap Holdings NV to issue bonds at a reasonable cost.
| Popular Name | AerCap Holdings HSBC Holdings PLC |
| Equity ISIN Code | NL0000687663 |
| Bond Issue ISIN Code | US404280DR76 |
| S&P Rating | Others |
| Maturity Date | 3rd of November 2028 |
| Issuance Date | 3rd of November 2022 |
| Coupon | 7.39 % |
AerCap Holdings NV Outstanding Bond Obligations
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Understaning AerCap Holdings Use of Financial Leverage
AerCap Holdings' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures AerCap Holdings' total debt position, including all outstanding debt obligations, and compares it with AerCap Holdings' equity. Financial leverage can amplify the potential profits to AerCap Holdings' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if AerCap Holdings is unable to cover its debt costs.
AerCap Holdings N.V., an aircraft leasing company, engages in the lease, financing, sale, and management of commercial aircraft and engines in China, the United States, Ireland, and internationally. AerCap Holdings N.V. was founded in 1995 and is headquartered in Dublin, Ireland. AERCAP HOLDINGS operates under Airports Air Services classification in Germany and is traded on Frankfurt Stock Exchange. It employs 384 people. Please read more on our technical analysis page.
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Additional Information and Resources on Investing in AerCap Stock
When determining whether AerCap Holdings NV is a strong investment it is important to analyze AerCap Holdings' 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 AerCap Holdings' future performance. For an informed investment choice regarding AerCap Stock, refer to the following important reports:Check out the analysis of AerCap Holdings Fundamentals Over Time. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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.