A sensible debt load depends on the size of the company and its industry: some sectors require greater financial resources to operate than others. Debt tends to have negative connotations. Companies with hefty financial liabilities risk going bankrupt if business dries up, sales drop and they fail to make interest payments.
What is debt load?
Debt load is the total amount of debt carried by an individual, government, or business. Publicly traded companies record their debt load on their balance sheets, providing investors with a snapshot of what they own and owe every quarter. Debt load is the total amount of debt carried by an individual, government, or business.
How does debt loading work?
Debt loading works by spending all cash reserves, maxing out lines of credit and credit cards, and failing to pay bills in anticipation of filing for bankruptcy protection. Essentially, the business loads up on as much debt as possible before attempting to clear the debt by filing for bankruptcy.
