A company that has more equity than debt financing his higher financial risk.

Question

Quizplus · Accepted Answer

A company with more equity than debt financing has lower financial risk because equity capital does not require regular interest payments like debt capital. Therefore, the company's ability to meet its financial obligations is less dependent on generating a consistent cash flow, which reduces the risk of insolvency in case of unexpected events or economic downturns.

A Company That Has More Equity Than Debt Financing His