Which of the following statements is true of the debt to equity ratio? A. The higher the debt to equity ratio, the gre...
Which of the following statements is true of the debt to equity ratio?
A. The higher the debt to equity ratio, the greater the company's financial risk.
B. If the debt to equity ratio is less than 1, the company is financing more assets with debt than with equity.
C. If the debt to equity ratio is greater than 1, the company is financing more assets with equity than with debt.
D. The higher the debt to equity ratio, the lower the company's financial risk.
Homework Answers
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Option A is the answer Debt to equity ratio = Total Liabilities/Total stockholders equity Higher the debt to equity ratio, higher the company's financial risk to its investors. Comment if you face any issues |
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