The Fed in the US raises interest rates frequently to lower inflation. It creates a burden on the companies and affects their profitability. Therefore, companies engaged in oil field services are making efforts to reduce their debt and improve operational efficiency.
An oil services company based in Houston has reduced its debt from $11.09 billion in 2021 to $7.60 billion as of June 2022. Such information is available in the filing with the SEC. If you are engaged in reducing debt and enhancing profitability for your shareholders, you can seek the help of Joseph Stone Capital, which has several years of experience in the financial services industry.
What is debt capital?
You need to understand the term “debt capital” before deciding to hire the services of a financial services company to benefit from debt reduction. It is the fund borrowed by organizations or companies from investors. Or lenders to meet the needs of working capital, acquisitions, and expansion operations. Those companies or organizations need to repay the debt with interest as agreed at the time of borrowing or maturity.
The companies engage in debt financing in the form of debt securities, bonds, and loans. The lenders, such as banks, financial institutions, and investors, decide the terms of repayment, maturity period, interest rate, and requirements of collateral. If the companies mobilize a lot of funds for their operations from investors. If and fail to pay back the funds with interest on time, they are overleveraged.
Mobilization of funds to close high-interest loans
Analysts and investors evaluate the company’s leverage and financial risk using the debt-capital ratio. Also, the debt capital structure of a company is determined by considering various factors such as the willingness of the company or organization to take on debt, borrowing capacity, creditworthiness, and financial objectives. Joseph Stone Capital will help your company raise funds for your financial commitments at reduced interest rates. The firm also helps your business reduce debt by offering low-interest loans from other financial institutions.
If your firm is looking for funds, you can take the help of this financial services company to frame loan terms in the agreement. And convince the investor about your creditworthiness, repayment capability, and on-time payment of interest. So, you can source funds for your company’s operations from pension funds and institutional investors.
Companies using debt capital financing enjoy greater financial leverage and flexibility. Debt financing types include lines of credit, bonds, bank loans, commercial paper, equipment financing, mezzanine financing, and SBA loans. It allows consistent cash flow and unlimited funding for your business operations and boosts profitability.
Benefits offered by debt capital to investors
Investors can invest in sound and trustworthy companies to multiply the value of their funds. Such investors can seek the assistance of this financial advisory to park their funds safely and earn interest at fixed intervals. And receive the principal along with balance interests in maturity. Investors can also diversify their investments by parking their funds in fixed-income securities and bonds. You can calculate the debt-capital ratio by dividing the total debt of a company by its total capital. The total capital of a company includes equity and debt.