Borrowing capacity

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.

Borrowing capacity reflects the ability of an individual or business to obtain loans based on income, assets, credit history, and repayment capability.

- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.

- Example: Finance teams use **Borrowing capacity** when planning funding needs and managing cash and risk.

- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.