BNET Business Dictionary
Business Definition for: Conversion Ratio
- an expression of the quantity of one security that can be obtained for another, for example, shares for a convertible bond.
Example: The conversion ratio may be established when the convertible is issued. If that is the case, the ratio will appear in the indenture, the binding agreement that details the convertible's terms.
If the conversion ratio is not set, it can be calculated quickly: divide the nominal value of the convertible security (typically $1,000) by its conversion price.$1,000 / $40 per share = 25In this example, the conversion ratio is 25:1, which means that every bond held with a $1,000 nominal value can be exchanged for 25 shares of common stock.
Knowing the conversion ratio enables an investor to decide whether convertibles (or a group of them) are more valuable than the shares of common stock they represent. If the stock is currently trading at 30, the conversion value is $750, or $250 less than the nominal value of the convertible. It would therefore be unwise to convert.
A convertible's indenture can sometimes contain a provision stating that the conversion ratio will change over the years.
- the number of shares of one common stock to be issued for each outstanding ordinary share of a different type when a merger takes place
Additional Resources
- Tenaris to Alter ADS Conversion Ratio
- LUXEMBOURG -- Tenaris S.A. (NYSE:TS) (BCBA:TS) (BMV:TS) (BI:TEN) announced today that its board of directors has approved a proposal to alter the conversion ratio of its American Depositary Shares ADSs from the current ratio of one ADS being equal to ten ordinary shares to a new ratio under which one...
- Research articles 2006-04-04
- Canadian Western Bank and B.C. Bancorp Report Conversion Ratio for Amalgamation
- EDMONTON, Alberta--BUSINESS WIRE--Sept. 24, 1996--CANADIAN WESTERN BANK (TSE, VSE: BBC) B.C. BANCORP(Alberta Stock Exchange: CWB) Canadian Western Bank and B.C. Bancorp formerly Bank of British Columbia today reported that the two banks signed an amalgamation agreement, subsequent to obtaining approval from their respective boards of directors, and that the conversion...
- Research articles 1996-09-24
- GE Healthcare Financial Services Announces Anticipated Conversion Ratio for the Acquisition of HPSC, Inc
- Business Editors CHICAGO & BOSTON--BUSINESS WIRE--Jan. 9, 2004 GE Healthcare Financial Services announced today the anticipated conversion ratio for its proposed acquisition of HPSC, Inc. (AMEX:HDR). If the transaction closes as planned on Monday, January 12, 2004, the formula provided for in the agreement would result in each...
- Research articles 2004-01-09
- SIRIUS Satellite Radio Inc. Q1 2008 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. Operator Instructions Benjamin Swinburne with Morgan Stanley is on the line. Benjamin Swinburne - Morgan Stanley Thank you. Good afternoon. Now, you talked about confusion in the market in the retail channel over the merger. And I am wondering if you had any research that...
- Earnings calls 2008-05-12
- Toll Brothers Inc. Q3 2009 Outlook Call Transcript
- Question-and-Answer SessionOperator Operator Instructions Your first question comes from Ray for Michael Rehaut – J.P. Morgan. Ray for Michael Rehaut – J.P. Morgan You talked about conversion rates this quarter. Could you give a sense of what those were? I think historically you talked about a 40% to 60%...
- Earnings calls 2009-08-12
- Improving Prospecting Performance
- Prospecting is a process of selecting the best candidates for a sales pitch. By using research to build an understanding of your prospects' needs, you can define the companies and individual decision makers most likely to lead to a sale. Good prospecting identifies the quality candidates—those who are most likely...
- Articles 2007-11-07
- Equinix, Inc. Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator [Operator instructions]. Our first question comes from Jonathan Schildkraut with Jefferies. Jonathan Schildkraut - Jefferies & Company Wow. Stephen M. Smith - President and Chief Executive Officer Hey Jonathan, how are you? Jonathan Schildkraut - Jefferies & Company Hi guys,...
- Earnings calls 2007-10-30
- XM Satellite Radio Q2 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Operator Instructions Your first question comes from Benjamin Swinburne from Morgan Stanley. Benjamin Swinburne - Morgan Stanley Thanks for taking the question. Good morning, guys. Joe, I just want to go back -- I only had one cup of coffee so far this...
- Earnings calls 2007-07-26
- Trading Activity Explained by GREKA
- NEW YORK--BUSINESS WIRE--April 1, 1999--GREKA Energy Corporation (Nasdaq:GRKA) has been informed by several shareholders that there have been misunderstandings within the market on the conversion ratio related to the Saba acquisition. The correct conversion is ONE GRKA share will be issued for every SIX SAB shares. It seems...
- Research articles 1999-04-01
- UST Q2 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Operator Instructions And our first question comes from the line of Filippe Goossens with Credit Suisse. Please proceed. Filippe Goossens - Credit Suisse Yes, good morning, gentlemen, and congratulations on a strong performance here. Murray Kessler Good morning, Filippe. Filippe Goossens - Credit Suisse Good morning. My...
- Earnings calls 2007-07-26
- Harvest Energy Trust Announces Increase to Exchangeable Share Ratio and Adjustment to Convertible Debenture Conversion Price
- CALGARY, Alberta -- Harvest Energy Trust ("Harvest") (TSX:HTE.UN)today announces an increase to the Exchange Ratio of the Exchangeable Shares of Harvest Energy Trust from 1.08192 to 1.08991. This increase will be effective on March 15th, 2005. As announced on February 28, 2005, Harvest will make a...
- Research articles 2005-03-11
- Parmalat proposes 7.3-percent debt-to-equity swap ratio for creditors
- MILAN AFP ? Parmalat Finanziaria, the parent company of Italian dairy and food giant Parmalat, said it had proposed a 7.3-percent swap ratio for the conversion of debt held by Parmalat creditors into shares in a new company called Assuntore. It said it would transfer to Assuntore liabilities and...
- Research articles 2004-07-14
- Sequa Exchanges Preferred Shares for Common
- NEW YORK -- Sequa Corporation has exchanged 91,168 shares of its Class A common stock for 61,600 shares of its $5.00 cumulative convertible preferred stock. The exchange was as a result of an unsolicited offer from a single holder. The exchange ratio was 1.48 shares of Class A common...
- Research articles 2005-06-27
- Harvest Energy Trust Announces Increase to Exchangeable Share Ratio and Adjustment to Convertible Debenture Conversion Price.
- CALGARY, ALBERTA, Mar 11, 2005 CCNMatthews via COMTEX Harvest Energy Trust ("Harvest") (TSX:HTE.UN)today announces an increase to the Exchange Ratio of the Exchangeable Shares of Harvest Energy Trust from 1.08192 to 1.08991. This increase will be effective on March 15th, 2005. ...
- Research articles 2005-03-11
- Sequa Exchanges Preferred Shares for Common
- NEW YORK--BUSINESS WIRE--March 3, 1998--Sequa Corporation yesterday exchanged 160,050 shares of its Class A common stock for 110,000 shares of its $5.00 cumulative convertible preferred stock held by a single holder. The exchange ratio was 1.455 shares of Class A common stock for each share of preferred. The conversion ratio...
- Research articles 1998-03-03
- What's Ahead for Natural Gas?
- Unlike oil, which can be transported and traded around the world, natural gas not in the liquid form is tough to transport, and thus boxed in within the producing continent. The inventory glut due to diminishing demand since the recession hit in the 4th quarter of 2008 has been pressuring...
- External links 2009-10-12
- How Internet Retailers Are Successfully Improving Their Conversion Rates
- You work so hard to get visitors to your site. You spend money promoting your site either through pay per click search, banner or other forms of online advertising. You may also be spending countless hours optimizing your website content for search engines, in the hope that your site will...
- White papers 2005-07-12
- Andrew Corporation Intends to Convert Outstanding Series 7.75% Convertible Preferred Stock
- ORLAND PARK, Ill. -- Andrew Corporation has announced its intention to exercise its right to cause the conversion of all the outstanding Series 7.75% Convertible Preferred Stock ("Preferred Stock") into shares of Andrew Common Stock ("Common Stock"). The company has 119,114 shares of Preferred Stock outstanding. The current conversion ratio...
- Research articles 2005-02-22
- Corrections Corporation of America Announces Conversion Ratio for Series B Preferred Stock During Final Conversion Period
- Business Editors
- Research articles 2000-12-06
- WebTrends Optimizes La Quinta Hotels ''Look to Book'' Ratio with WebTrends 7 On Demand
- SAN JOSE, Calif. -- WebTrends Helps Increase Conversion Rate by Offering More Actionable and Comprehensive Conversion Analytics
- Research articles 2005-04-18
