Biogen Debt Policy
Biogen Debt Policy
Biogen current capital structure (March 2017) has 9.74% debt to capital ratio and cost of equity is 5.44% and cost of debt is 2.47%. Biogen recent total debt is only0 .54 times total equity, while long term debt makes 34.92% of total capital. Biogen Inc.’s long-term debt to total assets ratio declined from Dec. 2015 (0.33) to Dec. 2016 (0.29). It may suggest that Biogen Inc. is progressively becoming less dependent on debt to grow their business. Biogen had $4.90 billion in cash on hand last quarter, 42.78% more than it did at the end of the year earlier quarter. These developments enhance the companys substantial flexibility in pursuing future growth opportunities and improve total returns to its shareholders
From a given Table (1) we can see that Biogen used funds from issuing debts and issuing stocks last year (2015) .in 2016 Biogen cash flow was 1.70 % higher than the 2015 cash flow.
If we consider the total debt data for over the past ten years than we will come up with Average 2.3 billion and current value of debt is 6.5 billion, shows debt has increasing. and current debt to equity ratio (.54) is low and this ratio is affected by both their policy and market conditions. historical average debt equity ratio (.11) Most of the Firms in related industry have a higher debt/equity ratio like Amgen (1.15), Gilead (1.39) and Celgene (2.165). Table 2.
Capital structure of peers like Amgen, Gilead, Celgene and peer average shows debt to capital ratio higher than Biogen, it reflects that Biogen is less risky than its peers. As drug manufacture companies, average D/E ratio is 29.85, companies like Biogen and its peer, have low D/E ratios means they can borrow easily and pay off their debt loads. As of September 10,2015,
Moodys Investors Service assigned a Baa1 rating to