If a firm's debt-to-equity ratio gets too high, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.

Question

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When a firm's debt-to-equity ratio gets too high, it indicates that the company has taken on a significant amount of debt relative to its equity. This can make it more difficult for the firm to secure financing, as lenders may be hesitant to provide additional funding to a company that is already highly leveraged. Additionally, high levels of debt can increase a company's financial risk, making it more challenging to meet its obligations and sustain growth over the long term.

If a Firm's Debt-To-Equity Ratio Gets Too High, It May