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Additional Loan

Do you think it is a good idea for a company to have liabilities (debt) when running their business? Why or why not?

Because the economy is slowed, the pizza shop business is down by 20%. You are thinking about taking out a further loan - should you?

Qs you need think about and ask?

· Do we have enough assets to secure an additional loan?

· How much money is owe to us?

o Is our credit policy too lenient?

· How much do we owe, how much is due soon?

· If we have to pay all out debt back today , would we have enough money to cover it or do we have to start selling anything that is not nailed down?

Solution Preview

You have to evaluate very carefully to see if getting a loan is a good idea or not. All the questions listed below need to be evaluated:

1. Make sure you have enough assets to secure the loan. If you do not have enough assets, you may not be able to get the loan.

2. ...

Solution Summary

The solution very clearly evaluates the option of taking out an additional loan or not. There are pros and cons for both side and the solution explores these briefly. The solution is perfect for someone looking to get a quick understanding of the pros and cons of taking on additional debt. Overall, an excellent response.