What are the advantages of a firm having no long term debt?

  The benefits of a firm having no long term debt (over one year loans, bonds, or notes) mean no loan or interest payment out (free of worry) at all with healthy growth, less costs of production and more net profit or income (Investopedia, 2009). You may say it is an old approach to do business with limited capital, market, tax credit, or investment (negative aspects), but they do take their responsibilities seriously with more creative marketing plans (e.g., Netflix, Inc.) when compared to those heavy debtors (or financial leverage) with poor management of Wall Street corporations that totally failed (and need the public and tax payers to help them out) in this mess financial crisis that turned into a worldwide recession. Fortunately, we have largest percentage of small to medium companies with less depending on long term debts that support our basic economy that keep many people employing.  Financial leverage is a good idea and reason to borrow (and becomes a culture of credit or borrowing—we have huge long term or national debt), which creates both risk and return (Gitman, 2009).  However, if companies do not take their responsibilities in finance or management, and business ethics, and evaluate, measure, or redesign their financial leverage strategies constantly, the public may suffer more at the end—e.g., how many people lost their jobs or incomes and how many families suffered because of their misstep or faults. The concept of financial leverage or credit has a price to pay; companies and management must take their responsibilities genuinely.

References

Gitman, L. (2009). Principles of managerial finance (12th edition). Boston, MA:  Pearson Prentice Hall

 Investopedia. (2009).  Long-term debt. Retrieved January 07, 2009, from

       http://www.investopedia.com/terms/I/longtermdebt.asp