Debt account

Debt account


*Debts are debts that must be paid off someday. It's a share you have to pay someday. In fact, whether you have money on hand or not, your debts remain there until they are paid off or forgiven. So, if you don't manage it properly with tools like whooing, you become a scary being.

Let's look at the relationship between debt and assets through loans. If you receive a loan of 1 million won, you have 1 million won in debt, and at the same time, 1 million won goes into your bankbook, so your assets also increase by 1 million won. We usually take loans to ensure that we know the debts we will have to pay off at some point in time, yet we have assets that can be flexible right now. And it is assumed that 300,000 won was spent on this asset. Then, the assets have been reduced to 700,000 won, and the loan debt is still 1 million won. If one day you earn more money and repay 1 million won, you have to give the bank 1 million won in the bankbook, so the bankbook itself will give you 1 million won and your debt will be 0. The order is as follows.

Situation Assets Liabilities
1. Received a loan of 1 million won 1 million won 1 million won
2. Expense 300,000 won 700,000 won 1 million won
3. Earned 2 million won 2.7 million won 1 million won
4. Repay the loan of 1 million won 1.7 million won 0 million won

From this example we can realize one thing. Liabilities can increase your assets, creating temporary financial space. However, it doesn't decrease forever until it is explicitly repaid (perhaps it actually goes beyond not giving and increases interest as it accrues). That is why it is not enough to manage and manage debt.

Debt isn't necessarily negative. It can be positive if the purpose of increasing debt is clear and if you are aware of and manage the risk. In fact, it is useful for companies to look at indicators such as the ratio of debt to equity.