Which is a disadvantage of debt financing?

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1065496

2026-04-02 15:40

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A disadvantage of debt financing is that it obligates the borrower to make regular interest payments regardless of their financial situation, which can strain cash flow. Additionally, excessive debt can increase financial risk, potentially leading to insolvency if the borrower cannot meet their obligations. This reliance on debt may also limit future financing options and affect the company's credit rating.

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