Prudential Financial 744320AV4 Bond

PRU Stock  USD 111.93  1.43  1.29%   
Prudential Financial holds a debt-to-equity ratio of 1.18. At this time, Prudential Financial's Short and Long Term Debt Total is comparatively stable compared to the past year. Short and Long Term Debt is likely to gain to about 1.2 B in 2024, whereas Short Term Debt is likely to drop slightly above 829.4 M in 2024. Prudential Financial's financial risk is the risk to Prudential Financial stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Prudential 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. Prudential 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 Prudential Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Prudential Financial's stakeholders.
For most companies, including Prudential Financial, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Prudential Financial the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book
1.417
Book Value
77.446
Operating Margin
0.2397
Profit Margin
0.0461
Return On Assets
0.0029
At this time, Prudential Financial's Short and Long Term Debt Total is comparatively stable compared to the past year. Short and Long Term Debt is likely to gain to about 1.2 B in 2024, whereas Short Term Debt is likely to drop slightly above 829.4 M in 2024.
  
Check out the analysis of Prudential Financial Fundamentals Over Time.
For more information on how to buy Prudential Stock please use our How to Invest in Prudential Financial guide.
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Given the importance of Prudential Financial's capital structure, the first step in the capital decision process is for the management of Prudential 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 Prudential Financial to issue bonds at a reasonable cost.
Popular NamePrudential Financial US744320AV41
SpecializationInsurance - Life
Equity ISIN CodeUS7443201022
Bond Issue ISIN CodeUS744320AV41
S&P Rating
Others
Maturity DateOthers
Issuance DateOthers
View All Prudential Financial Outstanding Bonds

Prudential Financial Outstanding Bond Obligations

Understaning Prudential Financial Use of Financial Leverage

Prudential Financial financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Prudential Financial's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Prudential Financial assets, the company is considered highly leveraged. Understanding the composition and structure of overall Prudential Financial debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to Prudential Financial's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Prudential Financial's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Last ReportedProjected for Next Year
Long Term Debt20 B17.7 B
Short and Long Term Debt Total20.9 B24 B
Net Debt1.5 B1.4 B
Short Term Debt873 M829.4 M
Long Term Debt Total17.9 B16.1 B
Short and Long Term Debt873 M1.2 B
Net Debt To EBITDA(12.54)(11.92)
Debt To Equity 0.75  0.81 
Interest Debt Per Share 62.28  40.95 
Debt To Assets 0.03  0.04 
Long Term Debt To Capitalization 0.42  0.27 
Total Debt To Capitalization 0.43  0.44 
Debt Equity Ratio 0.75  0.81 
Debt Ratio 0.03  0.04 
Cash Flow To Debt Ratio 0.31  0.37 
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When determining whether Prudential Financial is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if Prudential Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Prudential Financial Stock. Highlighted below are key reports to facilitate an investment decision about Prudential Financial Stock:
Check out the analysis of Prudential Financial Fundamentals Over Time.
For more information on how to buy Prudential Stock please use our How to Invest in Prudential Financial guide.
You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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When running Prudential Financial's price analysis, check to measure Prudential Financial's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Prudential Financial is operating at the current time. Most of Prudential Financial's value examination focuses on studying past and present price action to predict the probability of Prudential Financial's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Prudential Financial's price. Additionally, you may evaluate how the addition of Prudential Financial to your portfolios can decrease your overall portfolio volatility.
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Is Prudential Financial's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Prudential Financial. If investors know Prudential will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Prudential Financial listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.527
Dividend Share
5
Earnings Share
6.74
Revenue Per Share
148.498
Quarterly Revenue Growth
0.561
The market value of Prudential Financial is measured differently than its book value, which is the value of Prudential that is recorded on the company's balance sheet. Investors also form their own opinion of Prudential Financial's value that differs from its market value or its book value, called intrinsic value, which is Prudential Financial's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Prudential Financial's market value can be influenced by many factors that don't directly affect Prudential Financial's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Prudential Financial's value and its price as these two are different measures arrived at by different means. Investors typically determine if Prudential Financial is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Prudential Financial's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.