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high gearing a weakness or a threat?

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBL Exams › high gearing a weakness or a threat?

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by Ken Garrett.
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  • December 4, 2017 at 10:47 am #420114
    abdulahad92
    Member
    • Topics: 17
    • Replies: 36
    • ☆☆

    Sir, high liabilities such as bank loans or debentures are taken as weaknesses. But can they be included in threats also as the failure (or potential failure0 to repay may cause debenture holders or banks to carry moves which hurt the org. and obviously those are not in anyway in control of the org.?
    Plus sir, is the motivation of staff a weakness or a threat because sometimes people themselves are not committed tot he industry and no matter what efforts to comfort them they will not be appeased.

    Regards

    December 4, 2017 at 4:26 pm #420276
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10597
    • ☆☆☆☆☆

    Weaknesses often magnify threats. For example, high hearing increases the threat arising from higher interest rates. I class high vearing as a potential weakness (internal = weakness or threat).

    If staff have poor motivation then that is a weakness. A threat is that they are pehaps easily poached by another company.

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