In the arsenal of capitalizing a business operation, long term debt serves as one of the primary sources of capital. If you are an owner of a small business, you need to understand the relationship this source has to the overall financial status of the company. Too much debt and the owner is burden by the cash outlays to service.
Asset matching is a basic business method of making sure the long-term debt relates to the fair market value of the asset purchased with the proceeds from the related debt. Asset matching works both to maximize profitability and reduce solvency risk.