State the Conditions under Which Loans Are Ideal.

State the Conditions under Which Loans Are Ideal.

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a) When the company’s gearing level is low (the level of outstanding loans is low.
b) The company’s future cash flows (inflows and their stability) must be assured. The company must
be able to repay the principal and the interest.
c) Economic conditions prevailing. The company must have a long-term forecast of the prevailing
economic condition. Boom conditions are ideal for debt.
d) When the company’s market share guarantees stable sales.
e) When the company’s anticipated future expansion programs, justify such borrowing.

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Kavungya answered the question on March 11, 2019 at 13:22

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