Lydia Passolt

We had a top to talk about:
“The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family learned from hard experience during Prohibition and the Great Depression that debt can cause loss of flexibility and eventual loss of corporate control. The company will not place itself at such risk. As such, all future growth will be financed either by stock sales to the public or by internally generated resources.”

Here was the students response:  Do you Agree or Disagree with the student?
The company is immune to debt ratio at the moment. The company has to take in consideration about the competitors to have the right amount of debt on the balance sheet. Adding debt to the balance sheet is beneficial for the company its growth of finance working capital and big cash reserve. Its annual financial statements would be less which leads to increased profits. It will be controlled if the debt is maintained. They can surely take advantage of having debt on its balance sheet for the company.