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#190 Brad Jacobs: Building a Business Empire
The Knowledge Project with Shane Parrish
Optimal Balance Sheet and Debt Management
Optimal balance sheet includes a little bit of leverage to improve returns by reducing share count. However, excessive leverage can pose risks due to geopolitical uncertainties and potential economic shocks. Companies with too much debt face the risk of bankruptcy when revenues decline, making it essential to maintain a healthy debt level. A recommended target is one to two turns of debt based on EBITDA, ensuring a comfortable amount of debt that can be manageable in various business cycles.
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