[dcolkitt]

> extend financing seems like it'd be very related to a company's capital structure and leverage

This seems intuitively appealing, but is misleading. The Nobel-prize winning work of the Modigliani-Miller Theorem[1] that a firm's capital or leverage ratio does not prima facie have any impact on its weighted-average cost of capital.

[1] https://en.wikipedia.org/wiki/Modigliani–Miller_theorem

[SilasX]

Well, you have to take into account more stuff than what's one the prima facie, like when all businesses have to run on 1/3 revenue, and (like in the example in the link) can't even afford the interest payments that are due. That tends to make capital more expensive.

[clairity]

but a firm's WACC doesn't tell you what the marginal cost of capital is. marginal capital costs generally correlate with the leverage ratio (not necessarily linearly). at some point those costs are prohibitive (greater than free cash flow).