Optimizing her medical practice for long-term success.
Dr. Sharma, while earning a substantial income ($350K AGI), feels overwhelmed by her $280,000 in student loan debt and the financial responsibilities of owning a small medical practice. She worries that her high debt levels could hinder her practice's growth and her ability to secure favorable financing for future expansions or equipment upgrades. She needs a clear picture of her practice's financial health beyond just its profitability.
Using the Debt to Equity (D/E) Ratio Calculator, Dr. Sharma determined her practice's initial D/E ratio was 1.8, indicating relatively high leverage. She then explored scenarios involving consolidating her student loans with a small business loan at a lower interest rate. By projecting the impact of this consolidation on her D/E ratio (lowering it to 1.2), Dr. Sharma gained confidence in pursuing this strategy to improve her practice's financial standing and free up cash flow.
The Debt to Equity Ratio was calculated by dividing the total liabilities of Dr. Sharma's practice by its total equity. Scenario analysis involved adjusting the debt component to reflect the proposed loan consolidation.
$15,000 in annual interest savings and improved eligibility for future business loans.
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