DEBT is an essential part of any business. All companies should have some amount of debt to help finance its growth and investments for the longer term. It is an efficient way of managing the balance sheet.
But taking on too much debt can restrict a companys operational flexibility, and increase its risk of financial problems in a challenging economic environment.
So, there is only a fine balance between what is regarded as healthy and dangerous debt level and it varies across businesses and industries.
A research on 309 companies (excluding financial institutions) listed on Bursa Malaysia shows 188 firms in a net debt position as at end-September 2018.
In total, net debt increased 10.2% to RM286.3bil from a year ago.
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Read the full article at: https://www.thestar.com.my/business/business-news/2018/12/29/higher-debt-palatable-gearing/