Effect of loan on ability to pay dividends?

Limited company has regular monthly income and the usual reserves calculation shows it can pay another dividend next month to the owner/directors.

A loan has just been received from the bank, repayable over 3 years, and has been used to purchase the goodwill of another business. Do the loan or repayments affect the reserves calculation, and hence the amount that can be paid in dividends.

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Euan MacLennan |
Euan MacLennan's picture

More to consider

andypartridge |

Thanks Euan & Andy

gsgordon |