, Columnist
Teva Shows the Flip Side of Leverage
The weight of debt can shift in a hurry.
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It's easy to dismiss warnings of growing corporate leverage as an abstract concern of little near-term consequence.
But on Thursday, Teva Pharmaceutical Industries Ltd. gave a real-life example of the pitfalls of using borrowed money to juice profits. If revenues don't increase quickly enough, the downside is fast and furious. This is true years in the future, when borrowing costs go up, but it is true even now, in a low-yield world.