- This topic has 3 replies, 2 voices, and was last updated 3 years ago by
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1st question:
Gearing:
It seems surprising that High K Co’s debt levels fell during 20Y6 at a time of lower interest rates.sir why is it surprising?
2nd question :
interest cover:Interest cover improved in 20Y6 and will improve further if High K Co makes use of revolving credit facilities?not able to understand this?
1st question:
It is surprising to repay borrowings when the interest rate is low. Companies are usually pleased to be borrowing at low interest.
2nd question:
As their borrowings come up for repayment then if they borrow again (to keep the level of borrowing the same) then interest will remain the same and if the profits keep increasing then the interest cover will increase. However the problem is they might have to pay higher interest when they take out new borrowing.
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