Increasing leverage decreases management's flexibility in future financing decisions.

Name: Increasing leverage decreases management's flexibility in future financing decisions.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Increasing leverage means using more debt relative to equity. This can limit future financing options because higher debt levels may make it harder to borrow more in the future and can also restrict the company's operational flexibility due to the need to service the debt.

Increasing Leverage Decreases Management's Flexibility in Future Financing Decisions