Lennar Morgan Bond
| LEN-B Stock | USD 164.83 0.46 0.28% |
Lennar has over 2.94 Billion in debt which may indicate that it relies heavily on debt financing. At present, Lennar's Short Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Short and Long Term Debt is expected to grow to about 2.3 B, whereas Short and Long Term Debt Total is forecasted to decline to about 3.1 B. With a high degree of financial leverage come high-interest payments, which usually reduce Lennar's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Lennar'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. Lennar'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 Lennar Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Lennar's stakeholders.
For most companies, including Lennar, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Lennar, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Lennar's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 1.631 | Book Value 101.062 | Operating Margin 0.1389 | Profit Margin 0.1151 | Return On Assets 0.0878 |
Lennar |
Given the importance of Lennar's capital structure, the first step in the capital decision process is for the management of Lennar 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 Lennar to issue bonds at a reasonable cost.
| Popular Name | Lennar Morgan Stanley 3591 |
| Specialization | Consumer Durables & Apparel |
| Equity ISIN Code | US5260573028 |
| Bond Issue ISIN Code | US61744YAK47 |
| S&P Rating | Others |
| Maturity Date | 22nd of July 2028 |
| Issuance Date | 24th of July 2017 |
| Coupon | 3.591 % |
Lennar Outstanding Bond Obligations
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Understaning Lennar Use of Financial Leverage
Lennar's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Lennar's total debt position, including all outstanding debt obligations, and compares it with Lennar's equity. Financial leverage can amplify the potential profits to Lennar's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Lennar is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 3.4 B | 3.1 B | |
| Net Debt | -3.9 B | -3.7 B | |
| Short Term Debt | 560.2 M | 944.8 M | |
| Long Term Debt | 2.5 B | 2.4 B | |
| Short and Long Term Debt | 1.7 B | 2.3 B | |
| Net Debt To EBITDA | 2.58 | 2.96 | |
| Debt To Equity | 0.73 | 0.62 | |
| Interest Debt Per Share | 6.96 | 10.95 | |
| Debt To Assets | 0.29 | 0.23 | |
| Long Term Debt To Capitalization | 0.42 | 0.44 | |
| Total Debt To Capitalization | 0.42 | 0.44 | |
| Debt Equity Ratio | 0.73 | 0.62 | |
| Debt Ratio | 0.29 | 0.23 | |
| Cash Flow To Debt Ratio | 0.02 | 0.02 |
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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 Lennar offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Lennar's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Lennar Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Lennar Stock:Check out the analysis of Lennar Fundamentals Over Time. For information on how to trade Lennar Stock refer to our How to Trade Lennar Stock guide.You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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.