Reducing Debt is Better than Increasing Revenue

Published: Sep 22, 2004

Application

Good advice? This strategy is often expressed by those who ignore varying situations and conditions. It depends on a careful balancing act. A situation could be the company's positioning while a circumstance could be market conditions.

Debt reduces threats and limits opportunities whereas, revenue incurs taxation.

The advantages of reducing debt are not exclusive but sometimes are better as a strategic emphasis. In other words, reducing debt should be a first consideration only when deciding on the correct balance under a given set of circumstances. There are caveats.

Researchers into publicly traded companies try to determine the appropriate balance between debt, equity and revenue for a specific company in order to maximize return on investment. Most of us are painfully aware how often users of this research can make wrong decisions.

The trick is finding ways to increase revenue without incurring further debt.

However, when there's a low interest source there are better chances to leverage debt for growth and greater stability.

Stories

Stories from members will add great value to these maxims

Please post your story by emailing it to max@unclemaxsays.com.

Don't forget to sign up for our free newsletter.

Outcomes

Identifying circumstances when reducing debt is the best strategy.
A different perspective on financial management.

Reducing Debt is Better than Increasing Revenue

Application

Stories

Outcomes

Related Topics

Related Finance Books