Which is a major shortcoming of issuing debt instead of equity?
A) Shareholder control is not affected.
B) Income tax payable will be less.
C) Interest must be paid regularly.
D) Dividends are not tax deductible.

Question

Quizplus · Accepted Answer

Issuing debt requires regular interest payments regardless of the company's financial performance, which can strain cash flow, especially during downturns. Equity does not have this obligation.

Which Is a Major Shortcoming of Issuing Debt Instead of Equity