Companies under serious debt or acute liquidity problems may use financial manipulation to hide the problems. Such high leverage is such a huge pressure to meet obligations at maturity dates, and if the cash flows can't provide the cash to meet this obligation, the company may opt for financial position hiding either through earnings inflation or underreporting of liabilities.
Seriously, investors would look at the debt-to-equity ratio and its ability to service interest via operating income. However, frequent refinancing of debt and an increase in more short-term loans only just to solve liquidity issues will raise red flags from some potential financial distresses.