Final answer:
When a company assumes more debt, it means that the company is borrowing money to finance its operations or investments. This can have both positive and negative implications. One positive aspect is that it can provide the company with additional funds to fuel growth and expansion, but there are also potential downsides such as increased interest payments and financial strain.
Step-by-step explanation:
When a company assumes more debt, it means that the company is borrowing money to finance its operations or investments. This can be done by issuing bonds or taking out loans from banks or other financial institutions. As a result, the company's level of debt increases, which can have both positive and negative implications.
One positive aspect of assuming more debt is that it can provide the company with additional funds to fuel growth and expansion. For example, a company may take on debt to invest in new equipment, hire more employees, or develop new products or services. This can help the company generate more revenue and increase its profitability in the long run.
However, there are also potential downsides to assuming more debt. One major concern is that the company will have to make regular interest payments on the debt. As the debt increases, the interest payments also rise, which can put strain on the company's finances. Additionally, if the company is unable to generate sufficient cash flow to cover its debt obligations, it may risk defaulting on its loans or facing bankruptcy.