When looking at business costs, especially for a business that is struggling or looking to improve its margins will want to look at costs as bringing us one of three things:
When looking at the balance sheet, one common issue we see is not comprehending the interaction of book value of assets, loans and equity. Negative equity results for a variety of reasons. A few:
1) Loans using LTV (FMV) percentage and excess cash either pulled from the business or spent on overhead
2) Paying interest only on loans
3) Loans amortizing over a longer period than the depreciation timeline of the property (27.5 vs. 30)
4) Refinancing to pull cash
5) Obtaining debt to pay for operations - using other loans for operations
