Steadily increased gearing by building up lot of debt

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Reference no: EM132017360

In the first few months of 2018 a number of companies in the USA experienced serious financial problems. Each company has a lot of debt which it has been unable to service or may not be able to service.

(a) Discuss why a company might have steadily increased its gearing by building up a lot of debt.

(b) Suggest ways in which a company could deal with the servicing of its debt in order to avoid becoming insolvent.

Reference no: EM132017360

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