Debt repayments

• Overall


  Financial reports don’t have the capacity to disclose specific information about debt repayments.

  Usually, the only available information regarding a repayment is how much money is owed and who it needs to be paid to. Specific information such as when the debt is due, what the rate of interest is and the capacity of the debtor to repay the amount is not included in any financial reports
• Example


  For example, two businesses may report a one million dollar debt on their balance sheet, but this doesn’t mean their debts are equal. Business A has to pay the money back over 5 years at 1% interest, while Business B has to pay it back in 100 days and at 20% interest. Because this information is not included in the balance sheet, they appear equal, but they definitely aren’t