Gamehost Inc T.GH

Random thoughts by Nukester

[nukester]

Should a company always maintain a portion of debt on the balance sheet?

Is there some magic portion of debt / equity for optimal cost of capital?

As a regular working class rube, I have always strived to pay off debt.

Now I understand debt is a tool and capital is typically allocated to the highest return, but is there wisdom in a business having zero debt?

Do companies borrow money just to maintain a relationship with a lender?

I am curious of what other investors think on this topic.

Cheers,
Nukester

[BarstoolSage]

I can tell you the answer in a question. How long is a piece of string? It is all situation specific and debt, as you noted, is a tool. The real question is to what use is it put? Debt is a means to an end.  Like you, I see debt service as a fixed monthly obligation that must be met. In business it is fixed and variable costs, and the margin you earn on sales must first cover fixed