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Borrowing capacity

Influence of Long-Term Assets on Borrowing Capacities

December 17, 2023

How do noncurrent assets impact a company's borrowing capacity?

Noncurrent assets, especially those serving as collateral, enhance a company's borrowing capacity by providing security to lenders. A robust asset base improves creditworthiness, allowing companies to access larger loans at favorable terms. However, excessive asset encumbrance might restrict borrowing flexibility.

Tags : Noncurrent Assets , Borrowing Capacity , Long-Term Assets

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