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In the case of leveraged buyout, the company's debt will hire a company, which will greatly increase its debt to finance the amount of acquisition funds. When analyzing the companies in leveraged buyout, it is important to consider the ability of enterprises to pay extra interest on the basis of after-tax and regard it as a new possibility to pay off the company's debts.
Loan capital ratio formula: loan capital ratio = borrowed capital divided by total capital.
Loan capital is not functional capital, it is not an independent functional form of monetary capital in the industrial capital movement, but is transformed from idle monetary capital liberated from the industrial capital and commercial capital movement.
First, loan capital is the monetary capital that the loan capitalist temporarily lends to the functional capitalist to obtain interest. Lending capitalists actually transfer money as a special use value that can bring surplus value to capital, and recover and obtain interest after a certain period of time as a reward for transferring the right to use monetary capital for a period of time.
The lending relationship of capital is formally manifested as the buying and selling relationship of capital as a commodity. In fact, it is not the buying and selling relationship of commodity ownership transfer, but the lending relationship of transferring money as the right to use capital. In economics, the owner of monetary capital regularly lends money as a capital element to obtain interest income, which is called capitalization of ownership income.
Second, the use of loan capital separates the ownership and use right of capital, and the same capital has dual existence. Borrowing capital is the ownership of monetary capital for borrowing capitalists. It will not proliferate on its own, but it can earn interest by virtue of this ownership.
After this part of monetary capital reaches the hands of functional capitalists in the form of loans, it becomes a proliferation means to actually implement capital functions and produce or realize surplus value. Loan capital is the ownership capital in the hands of loan capitalists, not the functional capital; Only when it is used by functional capitalists can it become functional capital.
Third, borrowing capital has a unique form of movement. The movement formula of loan capital is G-G' (G+G), and G stands for interest. Because this formula omits the process of functional capital using loan capital, it creates the illusion that a currency itself can produce more money without any production process and circulation process, further covering up the real process of capital value appreciation.
References:
Baidu Encyclopedia-Lending Capital
References:
Baidu Encyclopedia-Lending Capital