For what purposes is it dangerous to take loans:

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to close another loan;
awards;
dividends.
It is not sustainable. When you borrow again and again to pay off other obligations, the debt hole becomes deeper.

Yes, sometimes entrepreneurs resort to loans to cover nepal telegram the cash gap. This can be done, but if you do not see profit in the Profit and Loss Statement (P&L), then taking a loan is extremely risky. Even when the client pays you, this money may still not be enough. If everything is in order with the loan purposes, let's move on to calculations.

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How to calculate whether you can take out a loan
Ideally, calculate the financial model. Then, based on solid figures, you can understand where the co-financing story is leading. It is important to consider different scenarios, have a “plan B” in reserve, and understand when to stop.

Reasonable risk and a head on your shoulders will never hurt. In addition to obvious expenses in the form of interest, the financial model should also include an increase in fixed costs (it may be necessary to hire additional staff to ensure business expansion).

In addition to the classic financial model, it is important to calculate the financial leverage . Financial leverage (credit leverage) assesses whether borrowed funds can push the company to growth or lead to collapse.

Financial leverage is the ratio of a company's debt capital to its equity capital. Debt capital is divided into long-term and short-term. The financial leverage effect demonstrates how loans affect profits.

EFR (financial leverage effect or DFL) = (1 - Снп) * (ROA - Рзк) * ЗК/СК