Home   Landscape Contractor   Free Lanscape Contractor Business Plan   8.14 Debt to Asset Ratio Analysis

8.14 Debt to Asset Ratio Analysis

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 Frank Murphy and Peter Perez . 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 Green Lawn Landscaping will be 0.33, 0.18 and 0.08 for 2016, 2017 and 2018 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 $70,000 term loan taken out from a local 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 Green Lawn Landscaping are projected to be $166,885 $204,185 and $253,107 for 2016, 2017 and 2018 respectively. These fixed assets include the original vans adjusted for depreciation, the security deposit of $2,200 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 2016, 2017 and 2018 will be $51,357, $101,063 and $162,369 respectively

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