Use of excess leverage can result from growth outstripping the company's internal financing capabilities. The company then relies increasingly on short-term notes until a cash flow problem develops.

Question

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Excess leverage can occur when a company's external financing, such as short-term notes, outstrips its internal financing capabilities due to rapid growth. This can lead to cash flow problems if the company is unable to make timely payments on its debts.

Use of Excess Leverage Can Result from Growth Outstripping the Company's