What does it mean for its shareholders when a company is applying most of its revenue...

What does it mean for its shareholders when a company is applying most of its revenue to the repayment of loans?

Expert Solution

If company is applying revenue to repayment of loan then shareholders would assume that company is in solvent position. This mean it is able to repay the debt timely and thus is generating higher cash flow to repay the loans. This would indicate positive sign for the company from shareholder's perspective. Shareholders would feel that money contributed by them are safe and there would be no liquidity and solvency issue.

jeff jeffy answered 2 years ago

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