Leverage Ratio Formula and Calculations
If ABC uses a combination of stock and debt, and the machine’s value rises by 30%, it’s worth Rs. 6,50,000. The company can use the profit to pay off the debt faster and eventually own the machine outright. If ABC chooses equity, they’ll give up part of the company but fully own the machine from the start.
Such questions have served to keep me out of investing in companies that appeared to be all right […]