What this tells us is that Simply Yoga has enough current assets to cover their current liabilities 8.36 times. Again, this is a good thing, unless they are paying a crazy amount of interest somewhere else. Might that cash be better used to pay off that loan they have sitting on the books? What are your personal thoughts and why?

Question

Social Studies

Madden Hammond

15 January, 21:52

What this tells us is that Simply Yoga has enough current assets to cover their current liabilities 8.36 times. Again, this is a good thing, unless they are paying a crazy amount of interest somewhere else. Might that cash be better used to pay off that loan they have sitting on the books? What are your personal thoughts and why?

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Answers (1)

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Estrada · Answer 1

Unless there are hidden interests to be paid it is always good to pay off loans.

Explanation:

Loans can accumulate a high tax rate for the person or the firm that has taken the loan and can and should be written off as soon as enough assets are accumulated to form a surplus and are not bound to the firm's overall growth capital.

This does not seem to be the case here as a hefty sum is simply leftover unused by the firm in terms of assets so they should be using it to write off their loans as fast as they can so as to be free of the interests and liabilities.