Calculation of After-Tax Cost of Debt in the UAE
Most of the time, a business hands their financials over to an accountant. The accountant probably does this calculation for them. Calculating the after-tax cost of debt is something any business owner can and should do, though.
Debt collection Dubai agencies can help you here with the calculations of the after-tax cost of debt in the UAE. They compromise of skillful and experienced workers. Moreover, they are available all over the UAE.
How to Calculate After-Tax Cost of Debt?
Below are some ways to calculate the cost of after-tax debt. You should consider these things to make it easier for you.
· Compile a Consolidated List of Outstanding Debt
This list needs to include all business debts that a company pays interest on. That includes any leases the company may have, as well as all secured or unsecured loans, credit cards, cash advances, lines of credit, or real estate loans. It should also include any loans that have a personal guarantee by the owner.
This list does not need to include general expenses, like rent or utility payments. It also shouldn’t include payroll expenses or equity financing. Though that should be considered when calculating the total cost of capital.
· Find the Associated Coupon or Interest Rates for All Debt
Compiling a list of outstanding debt is relatively easy, but it’s not always clear how much businesses are paying for their debt. This list should include the individual cost of capital for each debt product. A business needs to find every interest and lease rate it pays for its financing products.
This is a good time to put together with other debt information that can be helpful for future comparisons. Include the debt’s term, cost of additional fees, and any other benefits the debt offers to the business. This can help narrow down future financing choices.
The debt collection Dubai agencies can help you here with their expertise and legal assistance.
· Figure the Effective Tax Rate for the Business
The primary benefit of calculating the after-tax cost of debt is knowing how much a business can save on its taxes. It is due to the interest it paid over the year. This means businesses need to know their effective tax rate to understand their total cost of debt.
Therefore, if you are worried about the completion of this procedure, seek legal help. Debt collection Dubai can help you here with their explicit knowledge. They are available all over the UAE.
They provide their services in Ajman, Sharjah, and Fujairah too.