Debt capacity

Debt capacity

Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.

Debt Capacity

1. See: Debt ceiling.

2. The amount of debt that a person or company can repay in a reasonable amount of time using current resources and assuming income neither increases nor decreases. See also: Creditworthiness.
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But the presence in a scenario of subsidised borrowing, issue costs on new financing or an increase in debt capacity caused by a project are all signs that APV calculations are likely to be needed.
LSL Property Services has agreed a new PS100m banking facility from four banks to provide additional debt capacity, it has announced to the London Stock Exchange.
In this paper we use UK data to present empirical evidence on the valuation and debt capacity effects of foreign currency (FC) and interest rate (IR) hedging.
The proceeds of the financing will be used to repay existing debt, to provide additional debt capacity for merger and acquisition activity and for general corporate purposes.
B also has additional debt capacity and distributes a dividend to A; simultaneously, A makes a loan to B, or alternatively, B distributes a note to A; see the exhibit on p.
To determine the maximum debt capacity of a company, issuers and investors will consider a ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (EBITDA) of 4.
American Capital has achieved a significant improvement in pricing and an increased debt capacity with this unsecured facility," said Tom McHale, American Capital Vice President, Finance and Investor Relations.
Additionally, the commission provides a six-year forecast of state debt capacity and compares debt capacity to the six-year capital facilities plan that identifies projects proposed to use financing for their acquisition or construction.
Economies of scale allows for lower costs because: (1) Administrative costs can be reduced as more facilities are managed by fewer administrators; (2) a full range of products or services can be utilized to meet all customer needs; (3) marketing costs are reduced through shared advertising; (4) common technology can produce many products and/or eliminate duplicative services; and (5) larger enterprises have higher debt capacity and more ability to raise capital to invest in new technology and/or withstand the risks of cyclical downturns.
We examine the free cash flow, the growth rate and the debt capacity of each industry identified as having significant LBO activity.
While these covenants give Warner more room than the Acquisition bank facility covenants, Fitch estimates the company generally has debt capacity of less than $1.