The Debt to Assets ratio is a key ratio that is looked at by lenders and potential partners alike and hence it is very important to a small business ownes like Andy Powell and Jose Garcia . Just like the debt to equity ratio, it measures how much leverage a small business has employed to deploy the assets it currently has. Unlike the debt to equity ratio which measures the amount of debt to the shareholders equity, the debt to assets ratio looks at the leverage that is employed on the assets of the small business.
We are projecting that the debt to assets ratio for Lights On Electrical will be 0.29, 0.17 and 0.09 for 2015, 2016 and 2017 respectively. Once again this is an extremely healthy decline in this key ratio and it indicates better fiscal management. The debt of course is simply the $60,000 term loan taken out from a large national lender - this loan amount will keep on dwindling down as time passes and the firm continues to make its monthly payment of principal and interest.
The fixed assets for Lights On Electrical are projected to be $111,520, $99,440 and $87,360 for 2015, 2016 and 2017 respectively. These fixed assets include the original vans adjusted for depreciation, the security deposit of $2,800 along with current assets like cash, accounts receivable and inventory. The largest component of the fixed assets that will be showing growth is the cash. We are projecting that the cash balance for the years 2015, 2016 and 2017 will be $26,071, $90.619 and $166,609 respectively
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