This is extremely high for almost any industry or lender. You probably wouldn’t be able to get a second mortgage with this high of a ratio. If you were able to buckle down for a while and pay off your car and credit cards, your monthly debt payments would only be $1,500 bringing ...
Generally a high payout ratio may limit a company's ability to reinvest earnings, but some sectors are known for high payout ratios.Utilitiesandconsumer staplescompanies have higher dividend payout ratios than firms in most sectors due to high earnings and reliable cash flow. Dividend-payingcorpo...
While debt in business isn’t always a bad thing, the equity ratio helps present an accurate picture of a business’s current health. A high debt-to-equity ratio generally means that a company could have difficulty paying off its debts in a business downturn. The higher the D/E, the ...
But it was a job I NEEDED because my husband and I were over $100,000 in debt — $80,000 in student loan debt and $20,000 in credit card debt. (I’m not even going to talk about the mortgage!) Most mornings, I didn’t even see my husband to say good-bye. Because he was ...
They’re more likely to pay when they know exactly when their payment is due and what they’re paying for. Your credit policy should help you assess a customer’s ability to pay before extending credit to them. Lenient credit policies can result in bad debt, cash flow challenges, and a ...
Cash flow to debt ratio is the true measure of the creditworthiness of a firm. This is because a company has to pay its interest and retire its debt by paying cash. They cannot pass on the earnings that they may have recorded on accrual basis to creditors to satisfy their claims. ...
and the second is debt equity. With equity financing, an investor loans money to a business in exchange for small company owners. This is typically issued in the form of shares that represent the ownership percentage. Paying a shareholder can cost more than financing business needs through a le...
While debt carries the risk of bankruptcy, the reason companies still utilize leverage is that debt amplifies gains and losses, i.e. the added risk comes with the capacity for greater upside in gains if the borrowed capital is spent well. In general, the cost of debt is viewed as a “ch...
For credit card balances, yes, you pay interest on interest. The accrued interest is added to your unpaid balance, so you are paying interest on interest. This is why it can be so hard to get out of credit card debt because even if you pay the minimum balance, the interest on the un...
Paying off credit cards and selling a financed car are two ways a borrower can lower their back-end ratio. If the mortgage loan being applied for is a refinance and the home has enough equity, consolidating other debt with a cash-out refinance can lower the back-end ratio. However, beca...