Balancing growth, personal wealth, and financial risks.
David, at 38, built his SaaS company to $2M ARR. He's weighing a Series A versus acquisition offers. His personal portfolio, valued at $500k, is complicated by substantial RSUs. His immediate concern is understanding the company's debt obligations (existing small business loans) relative to earnings to negotiate effectively and ensure long-term financial security regardless of the chosen path.
Using Golden Door Asset's Times Interest Earned Ratio Calculator, we quickly determined David's company's ability to cover its $50,000 annual interest payments. The calculator revealed a healthy ratio of 10 (EBITDA of $500,000 / $50,000 interest expense), indicating strong debt coverage and bolstering his negotiation position. We further employed the Debt-to-Asset Ratio Calculator to show a ratio of 0.25 ($200,000 Debt / $800,000 Assets), a low debt burden relative to his company assets.
The Times Interest Earned Ratio was calculated using David's company's latest income statement and balance sheet data, readily available through his accounting software and easily input into the Golden Door Asset calculator.
$150,000 potential increase in acquisition valuation by showcasing financial stability.
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