Borrowing cost

The cost of borrowing refers to the cost incurred by the borrower from the borrowing process, which is usually the interest due on the borrowing process and his ability to repay on the specified dates.

Borrowing capacity reflects the ability of an individual or business to obtain loans based on income, assets, credit history, and repayment capability.

- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.

- Example: Finance teams use **Borrowing cost** when planning funding needs and managing cash and risk.

- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.