In the past, a company had to make a special effort to obtain a loan. With great reluctance, the bank in question had carried out an examination of the debtor before granting the loan. The credit check should allow a decision between yes and no. All accepted borrowers then had to pay a uniform interest rate.
Today, potential customers are literally wooed by commercial banking: every bank tries to be successful in making acquisitions. Actually, all interested parties get a loan today, but there are two restrictions.
1. Banks only grant loans up to a maximum amount that is determined by the debtor's debt capacity.
2. Banks charge an individual interest rate with which the expected default risks are compensated. The determination of this interest rate is based on a credit check (rating).
Die Debt-Capacity ist der Maximalbetrag für das Fremdkapital einer Unternehmung. Die Debt-Capacity bestimmt daher den Höchstbetrag einer Neuverschuldung es ist die Differenz der Debt-Capacity und der bereits bestehenden Schulden. Die Debt-Capacity wird aus dem Cash flow berechnet. Die Best-Practice ist, sie zu bemessen, daß bei Nullwachstum der Cashflow ausreicht, die Schulden weiterhin zu verzinsen und innerhalb von sieben Jahren zu tilgen. Sie wird deshalb mit DC-7 bezeichnet.
1. To calculate the debt capacity DC-7, a sustainable (free) cash flow is calculated from the cash flows realized in recent years. In the simplest case, it is an average of the (free) cash flows over the last three years. This figure is understood before interest payments, the interest may have to be added again.
2. Zero growth is then assumed for the future, that is, the sustainable cash flow describes all future cash flows under this scenario. Now the possibility of making interest payments and the repayment of debts in the amount of DC-7 from the cash flow within seven years is required. If the interest rate is positive, the DC-7 is slightly less than seven times the cash flow (including any interest currently paid). We want to denote the latter quantity with CF. The interest to be paid on borrowed capital is denoted by i; and in the case of a positive interest rate yields a compound interest calculation.
For example, for i = 8%, the ratio is 4.82; In the usual areas for interest rates, the debt capacity is approximately five times the cash flow.
Operating profit (EBIT) is used as the basis for calculating the free, sustainable cash flow.
Imputed taxes are deducted from EBIT. Dividends are also deducted if the situation makes them necessary. The same applies to bonus payments, which are common in the company and reduce the cash flow.
Depreciation is then added and those investments that are used for replacement (with regard to the zero growth scenario) are subtracted. This is how you get free cash flow.
In the event that the company has already borrowed and serviced, the interest payments are added. The fact that the deadline for repayment is just seven years looks arbitrary, but it is a result of practice.
Die Debt-Capacity wird von den Banken noch ein zweites mal berechnet, wobei nun eine Tilgungsfrist von zehn Jahren unterstellt wird. Die so ermittelte Debt-Capacity DC-10 ist natürlich etwas größer die gezeigte Formel läßt sich leicht umformulieren. Die Differenz zwischen beiden Beträgen, DC-10 und DC-7 wird als Volumen für eine Mezzanine financing angesehen, also für Kapital, dessen vertraglicher Cha-rakter zwischen Eigen- und Fremdmitteln einzustufen ist.
If a company has reached its debt capacity with existing outside capital, further debt becomes either impossible or extremely expensive. A secondary condition of value management therefore requires that finances be planned in such a way that there is always a certain amount of leeway for an increase in borrowed capital.