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What are the sources of risk from using leverage? What is the effects of using leverage...

What are the sources of risk from using leverage? What is the effects of using leverage on cash flows?
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There are different risks which arise out of using leverage such as insolvency risk and the Liquidity risks and risk of losing control over the business

there are different types of risk like credit risk, default risk and interest rate risk. these are associated with the leverage.

Leverage can be double edged sword as when the return on overall capital is higher than the cost of debt, then leverage will increase the cash flows, but when the return on capital is lower than the cost of debt then it will decrease the overall cash flows, because the interest outflows will be higher, and it will impact the cash flows negatively as there is not much profits to return back the debt holders.

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