In my last post, I argued that debt is usually necessary to grow your business—unless you intend to follow the old joke that the best way to build a million-dollar real-estate business is to start with $2-million. But you never want to focus on a single metric, especially when that metric is growth. I’ve known several business to grow themselves to death. Literally. So, today I want to talk about a couple of metrics that help maintain credit worthiness and business health:
- Debt-to-equity ratio
- Debt-coverage ratio