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how to prepare Balance sheet strong for Loan and CC
I want to ask that when we prepare p n l and balance sheet then which point we focus at that time. solve my misunderstanding.
Replies (1)
Following points should be considered:
1. Sales & Stock: CC limit is calculated on the basis of sales and stock. Higher the sales higher the limit and vice versa.
2. Ratios: Debt equity ratio, Current Ratio, Stock and Debtor turnover ratio, Interest coverage ratio.
3. Cash Flow: There should be sufficient cash flow in future to pay instalments of term loan.
4. Profit: There should be sufficient profit to pay interest.
1. Sales & Stock: CC limit is calculated on the basis of sales and stock. Higher the sales higher the limit and vice versa.
2. Ratios: Debt equity ratio, Current Ratio, Stock and Debtor turnover ratio, Interest coverage ratio.
3. Cash Flow: There should be sufficient cash flow in future to pay instalments of term loan.
4. Profit: There should be sufficient profit to pay interest.
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