Posts Tagged ‘short-term debt’

Accounts Payable is Not Long-Term Debt

This will be a very short article. It is a follow up to Current or Long-Term Debt that discussed the appropriate use of various kinds of debt.

Accounts Payable

A comment made in a forum about accounts payable is what prompted this brief update on debt and how it is used. The commenter noted that a company was reclassifying some of its accounts payable to a note payable. When I heard this all kinds of bells and whistles went off. This is usually an indication of Read the rest of this entry »

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Cash Flow Coverage Ratios

There are several cash flow coverage ratios. Let’s look at two that impact all sizes of companies, including small ones.

Some Preliminaries

The reason I will only discuss two of these ratios is that some of the others rarely impact small companies that are privately and/or closely owned. In both of the ratios we will look at OCF stands for operating cash flow. As a reminder, OCF is calculated as:

Net Income adjusted for non-cash charges and changes in current assets and liabilities. Again for this calculation net income is exclusive of Read the rest of this entry »

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Think Twice About Debt

Christmas has just passed and soon people will begin to see the consequences of their gift giving. Some of course have been very disciplined by either paying with cash or at least knowing they had the funds set aside to pay their credit card bill in total. Those who cannot pay their bill in tota Read the rest of this entry »

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Excessive Debt

If you have not already heard, the city of Detroit, Michigan is planning to default on a large portion of its debt and probably reduce pension payouts. So what is the lesson for your business?

Borrow Carefully

There are times when a business really does need to borrow to continue growing. However, there are also times when a business may borrow for the wrong reasons. In the case of Detroit and many other municipalities, commitments were likely made that far exceeded reasonable expectations of tax collections. One reason this could have happened was to avoid the Read the rest of this entry »

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