A Company Has a Debt-To-Assets Ratio of 0

question 152

Multiple Choice

A company has a debt-to-assets ratio of 0.45.If the company then borrows cash from the bank to finance a building acquisition,which of the following is a correct statement?

• A)The debt-to-assets ratio will be unchanged.
• B)The debt-to-assets ratio will increase.
• C)The debt-to-assets ratio will decrease.
• D)The debt-to-assets ratio will increase as a result of the cash received and then decrease as a result of the building acquisition.

---

Definitions:

Sovereign Immunity

A legal doctrine that exempts governments and their agents from being sued without their consent.

Act Of State Doctrine

A principle in international law that shields a nation from being sued in the courts of another nation for its sovereign acts.

Coercive Action

Using force or threats to compel someone to act in a certain way, often violating their freedom or rights.

Wholly Owned Subsidiary

A company whose entire stock is held by another company, making it completely controlled by the parent company.