Question

Why is it risky to invest borrowed money rather than use your own money in your business?

Answer 1

It is risky to invest borrowed money in business because although there is a chance of greater gain, there is also a higher chance of great loss.

Also, loans need to be repaid after a certain period, irrespective of the performance of the business which makes it riskier.

Also read:

• Difference Between Fixed Capital and Working Capital
• Intangible Assets
• Tangible Assets
• Difference Between Assets and Liabilities