What are the risks associated with debt financing?
An example of an AI chatbot conversation about the risks of debt financing.
What are the risks associated with debt financing?
Debt financing can lead to financial strain, increased interest costs, and potential bankruptcy if not managed properly.
Can you explain how high debt levels affect a company's credit rating?
High debt levels can lower a company's credit rating, making it more expensive to borrow in the future.
What are some strategies to mitigate these risks?
Strategies include maintaining a healthy debt-to-equity ratio, diversifying funding sources, and ensuring consistent cash flow.
Are there specific industries that are more vulnerable to debt financing risks?
Yes, industries with volatile revenues, like startups or cyclical businesses, are often more vulnerable to debt risks.
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