Читать книгу Investment Banking For Dummies - Matthew Krantz - Страница 44

Debt can be like dynamite for investment bankers and private-equity firms. When companies borrow, they can invest in new capacity or equipment using other people’s money. The investment can push up profit without asking shareholders to put more money into the business. That’s the upside of debt.

But debt comes with a big downside. The company must pay an interest rate to borrow the money. That interest rate is a cost that must be less than the returns being obtained from the assets bought with the debt. Also, if the interest gets too onerous and the company can’t keep up with the payments, the company may be forced into bankruptcy protection.