Some critics blame debt for the financial crisis of 2008. Although this is probably not true, debt did play some role in it. The crisis did not stop what The Economist calls addiction to debt in its recent article (A senseless subsidy, The Economist, May 16, 2015) - balance sheets of corporations get more and more debt and little equity. Looking at the WACC formula suggests that more debt relative to equity might lower WACC. Is financial leverage "always" good or "always" bad?

What does the Economist article say about debt being bad?

Looking at different industries, Suggest which ones would be expected to have the greatest and least leverage?

Answer rating: 100% (QA)

The Economist article mentioned in your question A senseless subsidy published on May 16 2015 highlights the issue of increasing debt levels in corpor... View the full answer