What Are the Risks Associated with Increased Borrowing?
While there are benefits, increased borrowing also comes with its own set of risks:
Debt Servicing: High levels of debt can lead to significant interest and principal repayment obligations. Financial Strain: Excessive borrowing can strain a business's finances and lead to bankruptcy. Credit Rating: Failure to repay borrowed funds can negatively impact the business's credit rating. Opportunity Cost: Resources used to service debt could be used for other growth opportunities.