Deciding to Take On Debt or Investors For Your Business

When businesses expand, they must increase liabilities or investments. The company’s financial position and the amount needed are determining factors. Current ratios provide an indication of a company’s ability to pay its debts, and the ratio of liabilities to equity indicates the better choice of adding debts or seeking investors.

Current Ratio

The current ratio is calculated by dividing the current assets by current liabilities.

Current asset accounts are cash, receivables and marketable securities that mature within one year.

Current liabilities are accounts payable and notes payable due within one year.

A current ratio of 2:1 indicates the entity has $2.00 in assets for each dollar it owes.

Credit Lines

Every business develops credit lines to finance daily transactions and capital improvements. These credit lines include financial institutions, suppliers and credit cards. Businesses may also use short-term credit for buying equipment. These are liabilities.

Merchant accounts, however, have an additional credit line provided by credit card processing companies. These companies buy credit card receivables at a discount and collect the payments when paid by the card user. Under normal circumstances, businesses use the cash and forget cash advances.

Cash Flow

Planning cash flow allows businesses to optimize investments and purchasing power. With proper planning, businesses borrow less and pay less interest. Using the current ratio as a guide, cash flow planners can more readily recognize surpluses for investment or points at which loans will be required.

Despite the best planning, owners have emergencies that require unexpected expenditures. In these situations, the owner should check credit lines for possible financing. These unexpected expenses are ideal for merchant accounts and credit card processing companies.

Why Add Investors?

Assets are divided between creditors and owners. The ratio is calculated by dividing total assets by equity. The ratio should be less that 1:1.

When incurring new debt, planners should add one-year’s payments to the current liabilities. Calculating the current ratio reveals the affordability of the debt. If the ratio is less than 1:1, the business should consider new investment.

By adding the new debt to total liabilities and dividing by equity, planners can determine the new ratio. A ratio of more than 1:1 indicates new investment may be required.

Planners should do additional cash flow and credit analysis before making a decision.



It took me a while to decide who I wanted to settle with to handle all of my credit card transactions because every company wants to make it sound like they're offering you the best rates. was able compare and beat all of the other offers I received. They were also able to provide me the fairest price on my EMV-compliant terminal. My sales representative and the support team were there to assist every step of the way. Ultimately, I'm looking forward to a long term relationship with this company.

Roland Tran from the Hong Kong Kitchen

It is a pleasure dealing with these folks. Their pricing is fair, their statements are understandable and their employees are knowledgeable and friendly.

John MacMillian from the Great Lakes Baking Company

The service was very professional, my sales person (Steven B.) was very well versed in the product and most helpful in getting our company set up to accept credit cards via my cell phone. Their rates are some of the lowest on the market and their service is unparalleled. I will recommend them to anyone requiring a credit card processing service.

Michael Harper from Deluxe Auto Body

Jonathan C. is wonderful to work with. He is very helpful, accommodating and resolves any issue quickly. It is hard these days to find someone who gives great customer service, but I can say, Jonathan is the best! I would not hesitate to recommend him to any business owner and to assist you in helping to grow your business.

Linda Garner from Regali Da Forno

I called indecisive about getting a device, but speaking to your Sales Consultant completely settled me. He was very professional, knowledgeable and patiently walked me through the process. He always responded to my voicemails and answered all my questions. After I received my merchandise, he called following up to ensure that I had received it. Customer service I would say is 5 stars. Stellar! Thanks Credit Card Processing, I will definitely recommend you.

Sarah Morgan from Vision International Ministries
Call Us Today! (866) 837-0751

© 2016 All rights reserved. Privacy Policy
CREDITCARDPROCESSING.COM, LLC is a registered ISO of Wells Fargo Bank, N.A. Walnut Creek, CA

*Further terms and conditions may apply. Promotion contingent upon's receipt of written competing offer(s).

**Certain restrictions may apply.

Promotional offers brought to you by

Call (866) 837-0751 for details.