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Debt and liquidity

How much a company owes and whether it can pay.

4 min · Intermediate · Lesson 7 of 10

Step 1 of 4

Debt isn't automatically bad

Borrowing lets companies grow faster, but interest must be paid in good times and bad. Heavy debt makes a company more fragile if business slows or rates rise.

  • Debt-to-equity below 1: more equity than debt.
  • 1–2: moderate.
  • Above 2: heavy borrowing, though normal for banks, utilities, and real estate.

For entertainment and education, not investment advice.