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What is the 10/20 rule in finance?

By Zippia Team - Jan. 8, 2023

The 10/20 rule in finance is a system of budgeting used by financial institutions. While it is very common in the finance industry, this rule can be used by anyone.

The main concept of the 10/20 rule is to keep a company's debt at or under 20% of the organization's annual revenue, while also maintaining monthly payments at no more than 10% of the company's monthly net profit.

The 10/20 rule is a great strategy for companies to stock up on capital and not overextend themselves through investments and other situations where money is lost.

What is the 10/20 rule in finance?

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