Originally Posted by
hiawatha
Unlike you, Macdunk, we don't all have crystal balls. One can't always know in advance whether a new business is going to make sufficient profits to cover interest, but that doesn't mean it's not worthwhile taking a risk. Similarly, property doesn't always increase by 10% pa. It has been known to drop in value.
At any rate, it's still prudent to maintain a reasonble ratio between equity and debt for purposes of risk management. Also, while a company needs a roof over it's head, it's by no means certain that it has to own rather than lease that roof. Owning may simply be tying up capital unnecessarily. As for the $800k per outlet they are spending on upgrades, this doesn't seem a lot given that the upgrades are likely to last 10-20 years.
hiawatha