What is Semiannual?
Semiannual (sometimes written as semi-annual), also known as bi-annual, is when an event occurs twice a year, every six months.
What Does Semiannual Mean?
In a business environment, semiannual is something that is recurring like payments or an interest rate. It can sometimes be used to convey a specific event such as a convention or meeting.
When looking at the interest rate on securities that are being received or issued, it can have a substantial impact on how the organization evaluates the risk management and decisions going forward.
Business can state payment periods, loans, or meetings as semi-annually. A company can issue reports on their financial statements semi-annually.
Semiannual versus Biennial
Semiannual and biennial are sometimes confused with each other. Semiannual describes an event that happens twice a year. A biennial event happens every other year. Biennial is often confused with bi-annual, which means the same thing as semi-annual, it is something that happens twice a year.
Example 1 – Loan repayment
A semi-annual loan payment starting on 1 January 2019 would require the first payment on 1 January and on 1 July.
Example 2 – Interest rate
Interest is sometimes stated for six months. If a semi-annual interest rate of 6% is calculated per year, it would mean that the overall interest rate that you will pay is 12%.
Let’s look at Jane’s Travel, Jane borrows $100,000 from the bank with a 6% semi-annual interest payment.
To calculate the interest per year you would multiply the interest by two, which results in a total annual interest of $12,000.
Example 3 – Interest repayment
Mark owns a construction company called We Build. Mark’s company often purchases large amounts of inventory to fill construction demands. Mark currently does not have the money to pay for the needed materials to meet his requests. Mark decides to take out a loan to cover the capital that he needs to fulfil the orders.
Mark is granted a loan with a compound interest rate, and the interest rate is payable semi-annually. This means that the compound interest rate is calculated on the bases of the principal added with the results of the compound interest rate from the previous term’s calculation, and this will happen twice a year.
Mark sets up an organizational meeting semi-annually to discuss the loan with other stakeholders. Seeing that the meeting is set semi-annual, it will occur twice a year.
Example 4 – Bond interest
A ten-year general obligation bond was issued by Ohio Pty Ltd in January 2019, the bond will pay interest on a semi-annual basis until the maturity of the bond in December 2029.
Investors who purchase the bonds will receive interest payments every six months for the time period. In this example, interest will be paid to shareholders on 30 June and 31 December every year until the maturity of the bond. Ohio Pty Ltd will have to publish a semi-annual report on its finances.
Example 5 – Dividend payments
Companies that pay dividends can pay dividends on a semi-annual basis; dividends will then be paid twice a year. Businesses can decide how they would like to pay dividends to their shareholders, they do have the option to pay no dividends.
Sams Corporation decides to make a semi-annual dividend payment to its shareholders. The shareholders will then receive a dividend payment twice a year from Sams Corporation. The payments will be made in June and December each year. Sams Corporation decides to publish their financial statement on a semi-annual basis to coincide with the dividend payments.
- Semi-annual is also known as bi-annual, is when an event occurs twice a year, every six months.
- In a business environment, semiannual is something that is recurring like payments or an interest rate.
- Semiannual and biennial are sometimes confused with each other.
1. What does semiannual mean?
Semiannual means an event that happens twice a year, every six months. In a business environment, semiannual is something that is recurring like payments or an interest rate.
2. What is the difference between semiannual and biennial?
The main difference between semiannual and biennial is that semiannual refers to something that happens twice a year, while biennial refers to something that happens every two years. Let's say you have a meeting that happens twice a year - this would be considered semiannual. If you have a meeting that happens every two years, that would be biennial.
3. What does interest compounded semiannually mean?
Interest compounded semiannually means that the compound interest rate is calculated on the bases of the principal added with the results of the compound interest rate from the previous term’s calculation, and this will happen twice a year.
4. Why is interest compounded semiannually important?
Interest compounded semiannually is important because it can result in a higher balance over time if left untouched. This is because the interest payments are being reinvested into the account, and therefore, the compounding effect will work on the principal and the accumulated interest from previous periods.
5. Can dividends be paid semiannually?
Yes, dividends can be paid semiannually. Businesses can decide how they would like to pay dividends to their shareholders, they do have the option to pay no dividends.