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Posted on April 28, 2022 at 4:39pm 0 Comments 0 Likes
This can sometimes make it difficult to understand what is listed in each part. Another necessary drawback of debt in contrast with equity is that a debtor should make the contractually agreed payments to its collectors or else be declared bankrupt. In distinction, a firm that is funded by equity can, if its monetary circumstances require, miss a dividend payment to shareholders without being declared insolvent. Thus, growing the proportion of debt relative to equity raises the probability…
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