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Why is the coupon rate a bad estimate of a firm's cost of debt?
A coupon rate is not a good estimate of a firm's cost of debt, as it is only a reflection of the firm's cost of debt when bonds were issued, not the current cost of debt. It's not representative of the yield in the current market.
Are Flexibility issues are those which impact the debt capacity that a firm should maintain?
The debt capacity that a firm can maintain is based on expected profits from products and services. Flexibility issues determine the capacity of debt that a firm can maintain.
What is debt-trap?
Debt Trap is a situation where you add on a new debt in order to pay an existing debt. Generally, when the firm or an individual is over leveraged all the credit sources are exhausted, the firm or individual arrives at a situation of debt trap.
If a firm has an equity multiplier of 2?
an equity multiplier of 2 means that the firm finances it asset with 50% of debt instruments. thus, for every $ of investments in assets, the firm matches it with an equivalent composition of debt.
How do you calculate debt service coverage ratio of a firm?
Debt Service Coverage Ratio = Interest payable on debt/Net Profit
What is levered firm?
A firm that has no debt.
What is debt trap?
Debt Trap is a situation where you add on a new debt in order to pay an existing debt. Generally, when the firm in overlevereged all the credit sources are exhausted, firm arrives at a situation of debt trap.
Why is the coupon rate a bad estimate of a firm's cost of debt?
A coupon rate is not a good estimate of a firm's cost of debt, as it is only a reflection of the firm's cost of debt when bonds were issued, not the current cost of debt. It's not representative of the yield in the current market.
Are Flexibility issues are those which impact the debt capacity that a firm should maintain?
The debt capacity that a firm can maintain is based on expected profits from products and services. Flexibility issues determine the capacity of debt that a firm can maintain.
What is debt-trap?
Debt Trap is a situation where you add on a new debt in order to pay an existing debt. Generally, when the firm or an individual is over leveraged all the credit sources are exhausted, the firm or individual arrives at a situation of debt trap.
Is Compass Debt Counsellors a reputable firm?
are they
If a firm has an equity multiplier of 2?
an equity multiplier of 2 means that the firm finances it asset with 50% of debt instruments. thus, for every $ of investments in assets, the firm matches it with an equivalent composition of debt.
As anyone used the firm Debt Line?
They are investors
How do you calculate debt service coverage ratio of a firm?
Debt Service Coverage Ratio = Interest payable on debt/Net Profit
If All else is constant an increase in a firm's cost of debt will do what?
will result in an increase in the firm's cost of capital.
What can be used for debt financing?
Debt financing can be achieved through selling bills, bonds or notes to individuals or institutions. Individuals or institutions thus lend money to a firm. They are investors. The firm is obliged to repay them the principal and the interest on that debt.
What is the Difference between firm's debt and partner private debt?
A firm's debt typically refers to the total liabilities incurred by the business, which can include loans, bonds, and other financial obligations owed to external creditors. In contrast, partner private debt refers specifically to the personal loans or financial obligations taken on by individual partners within a partnership, often to finance their share of the business or for personal investments. While firm's debt is a liability of the business itself, partner private debt is tied to the individual partners and may not directly impact the firm's financial statements.
