Username: Peter Rating: Asked to: Talitha Taslim Date Created: 02 Sep 2015 |
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Category | 28 |
Tag | Financial |
Question | What is delevereging? |
Hi Peter, Deleveraging is a term that comes into vogue following major economic meltdowns. When companies overdue their use of leverage, they run into trouble as they are faced with excessive interest payments. That's when deleveraging - getting rid of debt - comes into play. From a business perspective, deleveraging strengthens balances sheets. It is a sound course of action to get a company back on the right track. From a practical perspective, however, deleveraging isn't quite so pretty. Laying off workers, closing plants, slashing research and development budgets and selling off assets are all part for the course when implementing a deleveraging strategy as companies seek to retain extra cash in order to pay off their obligations. |
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