Creditors Would Like the Debt-To-Equity Ratio to Be _______, Indicating

question 35

Short Answer

Creditors would like the debt-to-equity ratio to be _______, indicating that stockholders have financed most of the assets of the firm.

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Definitions:

Compounded Monthly

Describes interest on an investment or loan that is calculated and added to the principal balance monthly, allowing for the interest to earn interest.

Guaranteed Investment Certificate

A secure investment that guarantees to return the principal amount along with a fixed rate of interest at the end of the investment term.

Interest

The cost of borrowing money, calculated as a percentage of the total amount borrowed.

Compounded Annually

Refers to the process of earning interest on both the initial principal and the accumulated interest from previous periods on a deposit or loan.