Recognizing the signs of over leveraging can help entrepreneurs take corrective action before it’s too late. Key indicators include:
1. Constant Refinancing: Frequently refinancing existing debt to meet obligations. 2. High Debt-to-Equity Ratio: A significantly high debt-to-equity ratio indicates excessive reliance on debt. 3. Difficulty Meeting Debt Payments: Struggling to make monthly debt payments is a clear sign of over leveraging. 4. Declining Profit Margins: Decreasing profit margins due to high interest and debt repayments.