A debt-to-equity ratio that is too high normally indicates the company has used up its borrowing capacity.

Question

Quizplus · Accepted Answer

A high debt-to-equity ratio indicates that a company has a high level of debt in proportion to its equity, which may mean that the company is relying heavily on borrowing to finance its operations. If the ratio becomes too high, it may indicate that the company has reached its borrowing capacity and may have difficulty obtaining additional financing if needed.

A Debt-To-Equity Ratio That Is Too High Normally Indicates the Company