Because high debt increases the likelihood of bankruptcy, it can lead to a downgrade in the firm's credit rating by agencies such as Moody's and Standard & Poor's.

Name: Because high debt increases the likelihood of bankruptcy, it can lead to a downgrade in the firm's credit rating by agencies such as Moody's and Standard & Poor's.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This statement is true. High debt increases the risk of bankruptcy, which can lead credit rating agencies to lower their rating on the firm's creditworthiness.

Because High Debt Increases the Likelihood of Bankruptcy, It Can