Financial Education - Indebtedness and the set of obligations contracted by companies

In accordance with yesterday's publication, one of the greatest risks that exist in Venezuelan companies is to promote accounting information and financial statements that are far from reality, a situation that can lead to major damages such as indebtedness and inadequate decision making, among others.

Indebtedness is a set of obligations incurred by the company. In this regard, it is stated that indebtedness is represented by amounts or volumes of obligations that the company obtains with third parties.

These levels of indebtedness of the same will depend significantly on various factors such as the interest rate, liquidity on the part of the company and the economic profitability and the sector in which the company is carrying out its activities.

In other words, indebtedness occurs when changes in profitability occur and it is required to expand and ensure the operability, indebtedness occurs when there is a change in financial profitability caused by economic profitability these results are by the presence of debt occurs when the economic profitability exceeds the cost of the liability. Finally, indebtedness is a resource that the company resorts to in order to guarantee the operability or expand the business.

As for inadequate decision making, it is the selection of several inappropriate alternatives, for the resolution of situations or simple, complex or difficult to manage problems that require immediate action or long time to be solved.