Balancing debt, business, and future investment.
Dr. Sharma carries $280,000 in student loan debt with a blended interest rate of 6.8%, resulting in substantial annual interest payments. While her AGI is $350,000, the debt and operational costs of her practice put a strain on her cash flow, potentially hindering her ability to invest in further practice development and personal wealth-building opportunities.
By using the Times Interest Earned Ratio Calculator, Dr. Sharma can quantify her ability to cover her interest obligations with her practice's earnings. For example, if her practice generates $150,000 in earnings before interest and taxes (EBIT), and her total interest expense is $30,000 (including student loans and business debt), the ratio is 5. This indicates a strong ability to meet interest obligations. She can then model different scenarios, like taking out a $50,000 loan for new equipment, and understand its impact on her financial health before committing.
The Times Interest Earned Ratio Calculator provides a clear, easily understandable metric that Dr. Sharma can track over time, alongside other key financial ratios, to proactively manage her business and personal finances. We can also use the Debt-Service Coverage Ratio Calculator to analyze loan eligibility.
$25,000 increase in investment capacity over three years by optimizing debt management.
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