equity and borrowing
Post on 24-Jun-2015
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Explore the Relationship of Equity to Borrowing Power
42459 Bradner Rd., Northville, MI 48168 d: 248-773-7580 f: 888-548-9213
dgaddis@curtisfunding.com www.curtisfunding.com
Cash $ -
Equipment 50,000.00$
Taxes (3,250.00)$
Commission (4,000.00)$
S&H (750.00)$
Warranty (1,200.00)$
Distributor Prof (16,000.00)$
OEM Prof (3,000.00)$
21,800.00$ 21,800.00$
Assets Liabilities
Equity
Cash $ -
Equipment 50,000.00$
50,000.00$ 50,000.00$
Assets Liabilities
Equity
Cash $ -
Equipment 50,000.00$
50,000.00$ 50,000.00$
Assets Liabilities
Equity
Cash 50,000.00$
50,000.00$
Assets Liabilities
Equity
Assuming you can
borrow 6x your equity, here you can
borrow $300,000 with $50,000 equity.
Can you see the
impact on equity when retained
earnings are used to purchase
equipment?
Equity is squandered due to the impact of
cost and value related factors associated
with the equipment. Borrowing power has
dwindled to $130,800, 1/3 its original power.
Hard-earned cash is moved
into equipment!
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