The higher the debt ratio,the higher risk of a company not being able to meet its obligations.

Question

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A higher debt ratio means that a company has more debt than equity. This increases the company's financial leverage, making it riskier as it may not be able to pay back its debts. Higher debt also means higher interest payments which can put a strain on the company's cash flow. All of these factors increase the risk of a company not being able to meet its obligations.

The Higher the Debt Ratio,the Higher Risk of a Company