What occurs when the value of a firm's debt exceeds the value of shareholders' equity?

Question

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When the value of a firm's debt exceeds the value of shareholders' equity, it means that the firm is financed more through debt than through equity. This indicates that the firm has taken on a significant amount of debt, which can be risky and result in a high rate of interest being paid on the debt. However, it does not necessarily mean that the firm is bankrupt or very risky, but it does suggest that the firm may be more vulnerable to financial difficulties.

What Occurs When the Value of a Firm's Debt Exceeds