One negative effect of using more debt in your capital structure is

Question

Quizplus · Accepted Answer

Using more debt in your capital structure leads to higher financial risk, which can lower a company's credit rating. A lower credit rating can make it more difficult for a company to raise additional capital in the future and may result in higher borrowing costs. Using more debt in the capital structure leads to a higher level of financial leverage, which can result in a lower credit rating from credit rating agencies. This is because high levels of debt increase the risk of default, which can make it more difficult for the company to borrow in the future and can also result in higher borrowing costs.

One Negative Effect of Using More Debt in Your Capital