Too much debt can cripple the flexible operations of a business. Too little borrowing will also make it difficult for the business to do the much-needed activities for success. Jay Findling, New Jersey Businessman, President and CEO of J Finn Industries helps businesses identify this limit that can propel them to the next level of success.
Follow Jay Findling official account on Twitter to gain knowledge on financial matters of the business. This knowledge is vital especially since each business is different and can work well with different levels of debts. This is to say that what is considered as healthy for one company could be too much or too little for another. What is business debt healthy for your business?
This method takes the level of debt against the equity/capital level that is available. The end percentage calculation indicates how much the business relies on debt. The higher the percentage the bigger the reliance on debt making the business less stable.
Calculating a debt ratio is affected by many factors and cannot be termed as a precise science. However, it is important in signaling the investors and stakeholders where the business is headed. Factors that determine this ratio include the type of the business it is, where it is located and its history of trade.
A ratio that exceeds 1 percent does not necessarily mean an unhealthy debt level. For some businesses, a debt can be a chance to expand and be a forecast for a long-term investment.
Before indulging in a debt, you should consult extensively and have a clear reason to take it. Jay Findling, New Jersey Businessman is one such great partner to help you identify the right time, amount and how to bargain for the best interest rate.
By Jay Findling, New Jersey Businessman
Jay Findling, New Jersey Businessman, President and CEO of J Finn Industries helps businesses identify this limit that can propel them to the next level of success.
