The possibility that shareholders will lose money when they invest in a company that has debt, if the company's cash flow proves inadequate to meet its financial obligations. When a company uses debt financing, its creditors will be repaid before its shareholders if the company becomes insolvent.
Tags: financial risk,dictionary,glossary,education,investment,tutorials,investing,invest,investor,stocks,quotes,analysis,beginner,finance,financial,market,news,401k,ira,personal,definitions,terms,mutual funds,ipo,options,nasdaq,trader,trading
