Because High Debt Increases the Likelihood of Bankruptcy, It Can

question 84

True/False

Because high debt increases the likelihood of bankruptcy, it can lead to a downgrade in the firm's credit rating by agencies such as Moody's and Standard & Poor's.

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Definitions:

Entrepreneurs

Individuals who create, organize, and operate a business or businesses, taking on greater than normal financial risks in order to do so.

C Corporation

A type of corporate structure where shareholders are taxed separately from the corporation, characterized by potential double taxation on earnings and dividends.

LLC

Limited Liability Company, a business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities.

LLC

Limited Liability Company, a flexible form of enterprise that blends elements of partnership and corporate structures, providing limited liability to its owners.