All of the Following Statements Accurately Describe the Debt Ratio

question 58

Multiple Choice

All of the following statements accurately describe the debt ratio except.

• A)It is of use to both internal and external users of accounting information.
• B)A relatively high ratio is always desirable.
• C)The dividing line for a high and low ratio varies from industry to industry.
• D)Many factors such as a company's age,stability,profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.
• E)The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

Grasp the role of underlying assumptions in the strength and validity of arguments.

Recognize the importance of not underestimating opponents in debate or dispute.

Understand the role and decisions of the Supreme Court in shaping early American law.

Recognize the cultural and artistic contributions to American society post-Revolution.

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Definitions:

Merchandise Inventory Account

An account that tracks the cost of goods available for sale to customers during an accounting period.

Service Businesses

Companies that earn revenue primarily through providing intangible products, such as services or expertise, rather than selling physical goods.

Merchandising Business

A type of business that purchases products from other businesses and sells them to customers.

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer is responsible for the goods and their transportation costs as soon as they leave the seller's premises.