[Verse 1]
Corporate treasurers calculate the price
Every borrowed dollar carries its own dice
Interest rates and tax shields intertwine
Making after-tax costs easier to define
Take your rate, subtract the tax relief
One minus rate times interest - financial brief
[Chorus]
Cost of debt, multiply and subtract
Tax shield protection keeps the burden compact
Interest coverage, earnings before the bite
Divided by payments - can you sleep at night?
Times interest earned, the ratio that screams
Whether debt will shatter or fulfill your schemes
[Verse 2]
Credit ratings whisper risk in banker's ears
Investment grade or junk - it costs more tears
Moody's and S&P dissect your books
Covenant breaches earn disapproving looks
Debt capacity stretches like elastic bands
Until breaking point slips through trembling hands
[Chorus]
Cost of debt, multiply and subtract
Tax shield protection keeps the burden compact
Interest coverage, earnings before the bite
Divided by payments - can you sleep at night?
Times interest earned, the ratio that screams
Whether debt will shatter or fulfill your schemes
[Bridge]
EBITDA cushions softly pad the fall
But cash flow tells the truest tale of all
Leverage ratios climbing up the wall
Bankruptcy courts await the final call
[Verse 3]
Weighted average blends the borrowing cost
Each tranche and tenor - nothing can be lost
Refinancing windows open and they close
Market timing separates the pros from those
Who miscalculate the burden they can bear
When interest payments thicken like night air
[Chorus]
Cost of debt, multiply and subtract
Tax shield protection keeps the burden compact
Interest coverage, earnings before the bite
Divided by payments - can you sleep at night?
Times interest earned, the ratio that screams
Whether debt will shatter or fulfill your schemes
[Outro]
Creditworthy borrowers dance on razor's edge
Between growth ambition and the bankruptcy pledge