Financial Statement Analysis: Callable Bonds

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Recommended: The usefulness of financial statement analysis to investors

Callable Bonds
Callable bonds, also known as redeemable bonds can be redeemed by the issuer prior to maturity. Usually a premium is paid to the bond owner when the bond is called. The main cause of a call is a decline in interest rates. If interest rates have declined since a company first issued the bonds, it will likely want to refinance this debt at a lower rate. In this case, the company will call its current bonds and reissue new, lower-interest bonds to save money.
Term Bonds
Term bonds are bonds from the same issue that share the same maturity dates. Term bonds that have a call feature can be redeemed at an earlier date than the other issued bonds. A call feature, or call provision, is an agreement that bond issuers make with buyers. This agreement is called an indenture, which is the schedule and the price of redemptions, plus the maturity dates. Some corporate and state bonds are
To disinvest
Shareholders are the owners of the company. Time and again, they may have to take decisions whether they have to continue with the holdings of the company's share or sell them out. The financial statement analysis is important as it provides meaningful information to the shareholders in taking such decisions.
2. Decisions Making
The management of the company is responsible for taking decisions and formulating plans and policies for the future. They, therefore, always need to evaluate its performance and effectiveness of their action to realize the company's goal in the past. For that purpose, financial statement analysis is important to the company's management.
3. Grant Credit
The creditors are the providers of loan capital to the company. Therefore they may have to take decisions as to whether they have to extend their loans to the company and demand for higher interest rates. The financial statement analysis provides important information to them for their purpose.
4. Investment

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