Finance and Accounting for NonFinancial Managers, 3rd Edition

9

Managing Liabilities

Learning Objectives

By the end of this chapter, you should be able to:

•  Explain the role of debt in the growth of a business.

•  List and explain the criteria used to evaluate a credit application.

•  Analyze bank loan pricing.

Neither a borrower nor a lender be;

For oft loses both itself and friend,

And borrowing dulls the edge of husbandry.

This above all: to thine own self be true,

And it must follow, as the night to day,

Thou canst not then be false to any man.

—William Shakespeare, Hamlet: Act I, Scene 3

OVERVIEW

This quotation, among the most famous in literature, may have been useful advice in its day, ...