Title: Can This Local Brewery Survive the Recession? Debt-to-Equity Analysis Reveals $3... Tagline: Can This Local Brewery Survive the Recession? Debt-to-Equity Analysis Reveals $35,000 in Potential Savings Problem: The Miller family, successful professionals earning $450,000 annually, are considering investing $50,000 in "Hops & Harmony," a local craft brewery. They love the beer and the atmosphere but are worried about the brewery's long-term viability, especially given increasing recessionary fears. Hops & Harmony's financials show total debt of $450,000 and total equity of $300,000. Without further analysis, the Millers risk investing in a potentially unstable business. They need to understand the brewery’s leverage and ability to weather financial storms. Solution: By using the Debt to Equity Ratio Calculator, the Millers can quickly assess Hops & Harmony's financial leverage. Inputting the brewery's debt and equity figures reveals a D/E ratio of 1.5. Further research into the craft brewing industry shows that a D/E ratio above 1.0 is generally considered risky. Using the Times Interest Earned Ratio calculator, the Millers discover that Hops & Harmony's EBIT only covers its interest expense 2.5 times, indicating a vulnerability to interest rate hikes. This prompts them to conduct further due diligence, uncovering a potential overpayment on a key piece of brewing equipment. ROI: By negotiating a $10,000 price reduction on the brewing equipment based on their findings (partially revealed through identifying an unsustainable debt burden), the Millers can decrease the brewery's debt, improving its long-term solvency and increasing their potential return on investment. Furthermore, avoiding investment altogether saves them the full $50,000, preventing potential losses and allowing them to seek more stable opportunities. A deeper dive into their own finances, prompted by this close call, reveals opportunities to improve their investment portfolio yield by 0.5% by reallocating some funds, generating an additional $25,000 in annual income. Description: Unlock the financial health of your investments! See if your target company is overleveraged using our Debt-to-Equity Ratio Calculator. Avoid companies poised to crumble under economic pressure. Category: Lead Gen