What is the impact of excessive corporate debt?

The influence of excessive debts on enterprises;

1, resulting in financial risk of enterprise revenue and expenditure. If it is serious, it will easily lead to bankruptcy of the enterprise. Through debt management, enterprises can raise a lot of funds, but the effect of the use of funds is very critical. If in the process of production and operation, the operators do not pay attention to the market dynamics and the products are not sold well, it will be difficult to recover the funds, which will inevitably make the enterprise unable to pay the due debts, principal and interest and shareholders' remuneration, leading to financial risks in revenue and expenditure. This kind of risk is a holistic risk, which will adversely affect the repayment of all debts and the payment of shareholders. Especially when the income of the enterprise exceeds the expenditure, the shareholders' equity will also decrease, thus reducing the total assets as debt repayment guarantee. The greater the loss, the smaller the ability to repay debts with assets. This means that enterprises are facing operational failure.

2. Excessive debt and unreasonable term structure lead to cash financial risks.