Borrowing capacity
Financial Dictionary — Finance & Lending
Definition
Borrowing capacity is the ability of a person or company to borrow, given the financial position of the company or person and its ability to repay in subsequent periods.
Use cases, Example & Why it matters
Use cases
- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.
- Used to evaluate cash flows, financing costs, and capital structure.
Example
- Example: Finance teams use **Borrowing capacity** when planning funding needs and managing cash and risk.
Why it matters
- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.