Page 20 - CIMA SCS Workbook February 2019 - Day 2 Tasks

CIMA FEBRUARY 2019 – STRATEGIC CASE STUDY

Reference Material - Introduction from an article from “Corporate Finance Monthly” magazine

Busting the myths around borrowing

by Rayle Mountain, Corporate Finance expert

Borrowing is bad, right? All that extra interest to pay, and greedy banks demanding repayment….

Prevailing attitudes to debt finance tend to focus on these negative factors, but actually there are
compelling reasons why companies should increase borrowings to fund new investments.

If a company is perceived as being “credit worthy”, lenders will be keen to lend, and the company
should be able to unlock many benefits associated with debt finance.

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36 KAPLAN PUBLISHING