Western Asset Municipal 55336VAK6 Bond
| MHF Fund | USD 6.80 0.03 0.44% |
Western Asset Municipal holds a debt-to-equity ratio of 0.008. Western Asset's financial risk is the risk to Western Asset stockholders that is caused by an increase in debt.
Western |
Given the importance of Western Asset's capital structure, the first step in the capital decision process is for the management of Western Asset 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 Western Asset Municipal to issue bonds at a reasonable cost.
| Popular Name | Western Asset MPLX LP 4125 |
| Equity ISIN Code | US95766N1037 |
| Bond Issue ISIN Code | US55336VAK61 |
| S&P Rating | Others |
| Maturity Date | 1st of March 2027 |
| Issuance Date | 10th of February 2017 |
| Coupon | 4.125 % |
Western Asset Municipal Outstanding Bond Obligations
| MPLX LP 4125 | US55336VAK61 | Details | |
| MPLX LP 52 | US55336VAL45 | Details | |
| BNP Paribas FRN | USF1R15XK367 | Details |
Understaning Western Asset Use of Financial Leverage
Western Asset's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Western Asset's total debt position, including all outstanding debt obligations, and compares it with Western Asset's equity. Financial leverage can amplify the potential profits to Western Asset's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Western Asset is unable to cover its debt costs.
Western Asset Municipal High Income Fund Inc. is a closed ended fixed income mutual fund launched and managed by Legg Mason Partners Fund Advisor, LLC. Western Asset Municipal High Income Fund Inc. was formed on November 28, 1988 and is domiciled in the United States. Western Asset operates under Asset Management classification in the United States and is traded on New York Stock Exchange. Please read more on our technical analysis page.
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Other Information on Investing in Western Fund
Western Asset financial ratios help investors to determine whether Western Fund 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 Western with respect to the benefits of owning Western Asset security.
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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.