“Let’s say, one takes a home loan to purchase a real estate property. The assumption is that the borrower will let out the real estate property on rent and earn rental income. With this rental income, he/she plans to pay the EMIs. At the end of the loan tenure, the residential property becomes an asset. What if, in the economy, supply of real estate properties is more than the actual demand (the number of tenants are less than the available real estate property)? During the covid-19 pandemic, outstation employees returned to their respective hometowns. Real estate properties let out on rent remained empty for months. But the borrower had to pay EMIs on time. If the liquid assets coverage ratio was ignored at the first place, while opting for any loan(s), loan repayment capacity becomes an uphill task. Therefore, ratio analysis is a critical aspect, which we, as financial advisors, need to consider while working with clients reeling from a debt trap,” says Arijit Sen, a Sebi-registered investment advisor and co-founder of Merry Mind, a Kolkata-based financial advisory firm.