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straighterine (877) 787-8375 HELP CENTER Topic 3: Corporate Investments A companys debt-to-equity ratio was 1.0 at the end o
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Answer #1

Answer = False

Explanations-

Formula for debt to equity ratio formula = Debt / Equity Shareholder's funds

Debt to Equity ratio end of Year-1 = 1.0

Debt to Equity ratio end of Year-2 = 1.7

The Debt to Equity ratio increased in a year, This change results in increase in the degree of the firm's financing structure. As the Change which occur is possible by two ways i.e. Debt of the company is increased or Equity Shareholder's fund Decreased Which both results in increase in the degree of the firm's financing structure. The increase in debt would result in increase in future payments to debts or decrease in Equity Shareholder's fund would result in lesser control over the company.

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