EBay Bonds

EBAY -  USA Stock  

USD 58.30  0.59  1.02%

EBay's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. EBay's financial risk is the risk to EBay stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Continue to the analysis of EBay Fundamentals Over Time.

EBay Bonds 

 
Refresh
EBay Debt Current is fairly stable at the moment as compared to the past year. EBay reported Debt Current of 6.9 Million in 2021. Long Term Debt to Equity is likely to rise to 2.12 in 2022, whereas Total Debt is likely to drop slightly above 8.9 B in 2022.

EBay Current Financial Burden

EBay'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. EBay'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 EBay Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect EBay's stakeholders.

Asset vs Debt

Equity vs Debt

For most companies, including EBay, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running EBay Inc 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.
Given that EBay's debt-to-equity ratio measures a company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which EBay is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of EBay to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, EBay is said to be less leveraged. If creditors hold a majority of EBay's assets, the company is said to be highly leveraged.

EBay Quarterly Debt to Equity Ratio

1.673Share
Given the importance of EBay's capital structure, the first step in the capital decision process is for the management of EBay 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 EBay Inc to issue bonds at a reasonable cost.

EBay Bond Ratings

EBay Inc bond ratings play a critical role in determining how much EBay have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for EBay's borrowing costs.
Overall Bond Rating
Strong
Average S&P Rating
A
Piotroski F Score
6  Healthy
Beneish M Score

EBay Inc Debt to Cash Allocation

As EBay Inc follows its natural business cycle, the capital allocation decisions will not magically go away. EBay's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies 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.
The company currently holds 9.31 B in liabilities with Debt to Equity (D/E) ratio of 0.85, which is about average as compared to similar companies. EBay Inc has a current ratio of 3.28, suggesting that it is liquid enough and is able to pay its financial obligations when due.

EBay Receivables Over Time

EBay Assets Financed by Debt

The debt-to-assets ratio shows the degree to which EBay uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

EBay Debt Ratio

    
  42.65   
It appears slightly above 57% of EBay's assets are financed through equity. 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 EBay's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of EBay, which in turn will lower the firm's financial flexibility. Like all other financial ratios, an EBay debt ratio should be compared their industry average or other competing firms.
Share Download
Share Download

EBay Corporate Bonds Issued

EBay issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. EBay Inc uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt. Most EBay bonds can be classified according to their maturity, which is the date when EBay Inc 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.
Issue DateMaturityCouponRef Coupon  Rating
EBAY INC 2607/24/201207/15/20222.62.0
A
EBAY INC 407/24/201207/15/20424.03.0
A
EBAY INC 34507/28/201408/01/20243.452.25
A

EBay Inc Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of EBay, understanding its historical liability is critical in projecting EBay's future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how EBay uses its financing power over time.
In order to fund their growth, businesses such as EBay widely use Financial Leverage. For most companies, financial capital is raised by issuing debt securities and by selling common stock. The debt and equity that make up EBay's capital structure have many risks and return implications. Leverage is an investment strategy of using borrowed money to increase the potential return of an investment. Please note, 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.

Understaning EBay Use of Financial Leverage

EBay financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures EBay'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 EBay assets, the company is considered highly leveraged. Understanding the composition and structure of overall EBay 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.
Last ReportedProjected for 2022
Total Debt9.3 B8.9 B
Debt Current6.9 M7.1 M
Debt Non Current9.3 B8.5 B
Issuance Repayment of Debt Securities-5.4 M-5.5 M
Long Term Debt to Equity 1.96  2.12 
Debt to Equity Ratio 5.09  5.49 
eBay Inc. operates marketplace platforms that connect buyers and sellers worldwide. The company was founded in 1995 and is headquartered in San Jose, California. EBay operates under Internet Retail classification in the United States and is traded on NASDAQ Exchange. It employs 12700 people.
Please read more on our technical analysis page.

Be your own money manager

Our tools can tell you how much better you can do entering a position in EBay without increasing your portfolio risk or giving up expected return. As an individual investor, you need to find a reliable way to track all your investment portfolios. However, your requirements will often be based on how much of the process you decide to do yourself. In addition to allowing all investors analytical transparency into all their portfolios, our tools can evaluate.risk-adjusted returns of your individual positions relative to your overall portfolio.

Did you try this?

Run Insider Screener Now

   

Insider Screener

Find insiders across different sectors to evaluate their impact on performance
All  Next Launch Module

Pair Trading with EBay

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if EBay position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EBay will appreciate offsetting losses from the drop in the long position's value.

EBay Pair Correlation

Equities Pair Trading Analysis

Correlation analysis and pair trading evaluation for EBay and Mogu Inc ADR. Pair trading can be used as a hedging technique within a particular sector or industry or even over random equities to generate better risk-adjusted return
Run Pair Correlation  
Continue to the analysis of EBay Fundamentals Over Time. Note that the EBay Inc information on this page should be used as a complementary analysis to other EBay's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

Complementary Tools for EBay Stock analysis

When running EBay Inc price analysis, check to measure EBay'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 EBay is operating at the current time. Most of EBay's value examination focuses on studying past and present price action to predict the probability of EBay's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move EBay's price. Additionally, you may evaluate how the addition of EBay to your portfolios can decrease your overall portfolio volatility.
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Is EBay'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 EBay. If investors know EBay 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 EBay listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of EBay Inc is measured differently than its book value, which is the value of EBay that is recorded on the company's balance sheet. Investors also form their own opinion of EBay's value that differs from its market value or its book value, called intrinsic value, which is EBay'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 EBay's market value can be influenced by many factors that don't directly affect EBay'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 EBay's value and its price as these two are different measures arrived at by different means. Investors typically determine EBay value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, EBay'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.
  • 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.