As a general rule, companies with high levels of indebtedness, above the investment they need for their activity are usually companies that have had a more or less long period with low or negative profitability or cash generation. Therefore, it is advisable to analyze the financial pillars including among others total debt vs total liabilities, simultaneously to have a global vision of the financial health of the company.
Read MoreIf an individual has been sold goods on credit, but cannot pay its debt the seller considers this money uncollectible and it is what we term as bad debt.
The bad debt is removed from the company’s accounts by recording it as an expense. This is called a bad debt expense. This article will detail what a bad debt expense is and how you can find it on the financial statements. It will also analyse how you can record them in your bookkeeping records.
Read MoreChances are good though that you will need a major monetary infusion at some point to really grow your business. At that point, you either need to attract angel investors, venture capitalists or take out a loan.
As different as the process of obtaining funding is using any of these three options, they all have one thing in common. Each of the methods looks at your debt-to-equity (D/E) ratio to determine the fiscal health of your company.
Read MoreJust about every business has some type of debt. There are a few businesses among us that have managed to exist in a debt free way. Unfortunately, that is not the majority. While many companies have debt, they do not truly understand how that debt impacts their business and financial situation. To get a better idea of how debt impacts your business, continue reading this article to learn about examples of the cost of debt.
Read MoreIf you run any type of business, there will come a time when you need to acquire debt. You may need to purchase equipment or add a wing to your facility. Also, you may need to calculate your after-tax cost of debt for business purposes or individual knowledge. The following is some information about the after-tax cost of debt and how you can calculate that figure for yourself.
Read MoreTo successfully run a business, it's important to understand how to handle small business debt. At some point, most business owners need to borrow to realize the full potential of their company. As a business owner, you shouldn't be afraid to borrow. However, you do need to learn how to manage debt.
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