Navigating Business Debt to Secure Your Future
Dr. Garcia's thriving dental practice generates $1.2 million annually, but she carries a significant debt load from a recent expansion and equipment upgrades totaling $750,000. This debt, combined with private school tuition for her two children, leaves her concerned about meeting her debt obligations while adequately funding her retirement accounts. She fears a cash flow crunch that could jeopardize both her practice and her long-term security.
Using the Debt Service Coverage Ratio Calculator, we assessed Dr. Garcia's current DSCR at 1.1, indicating tight cash flow management. By refinancing her highest-interest loan and implementing strategies to increase revenue by 5% (approximately $60,000 annually), we projected a DSCR improvement to 1.4, creating a healthier financial cushion. This allows her to allocate an additional $30,000 annually to her retirement savings, accelerating her path to financial independence.
The Debt Service Coverage Ratio Calculator was used to model different scenarios, including debt refinancing and revenue growth. Results were stress-tested using sensitivity analysis to account for potential economic downturns or unexpected expenses.
$250,000 increase in projected retirement savings over 10 years.
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