how is it that in times of crisis major businesses will go bankrupt within months? Do they have no savings or what?
In: Economics
Businesses borrow money, which they use to make their company better at making money. With the extra money they make, they pay back their debts. This means that as long as a company is making more and more money, they can manage their level debt. If they suddenly stop making money, they have nothing to pay their creditors and the debt becomes a problem.
Latest Answers