FIN – Excess Leverage

| July 29, 2018

1. What are the common signs of excess leverage? And alternatively, are there any signs within an organization if the company is not using enough leverage? (And, to add one more follow up question, shouldn’t companies actually try to avoid leverage with the potential of its use being “unsuccessful”?)2. It is true that financial risk can increase as debt increases. Higher interest rates can be a signal of too much debt. However, are there any additional signs or red flags which could be evident? Is preferred stock the same as leverage and is preferred stock risky?

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