Which of the following describes a disadvantage of excessively relying on debt in capital structure?

Reliance on debt in a company's capital structure can lead to increased financial risk. When a business takes on significant debt, it becomes obligated to make regular interest and principal payments regardless of its financial condition. This can strain cash flow, particularly during periods of low revenue, and can lead to financial distress or default if the company cannot meet its obligations.

Additionally, higher levels of debt can lead to increased volatility in earnings and financial performance because fixed financial commitments amplify the effects of changes in operating income. This increased financial risk can deter potential investors and creditors, as they may view the organization as more prone to financial instability.

In contrast, improved investor confidence, better liquidity management, and enhanced market presence are generally associated with prudent capital management practices. Therefore, they are not considered disadvantages of excessive reliance on debt.