(Get Answer)

ace. If a company is just starting out, it will likely take on a lot of debt initially. So its assets will be financed mostly by the debt - in turn making it less likely to receive investors as you said. If it required more assets, it would require either taking on more debt or it would require investors. We already know the investors are not very interested, so maybe they get some equity but most of the funds for the assets would come from taking on more debt. So how then would the company get out of this cycle in order to get their Capital Structure to a place where the investors were interested? Would other factors be involved during this time to gain the investors such as company clout for instance?