A Company Has a Debt to Assets Ratio of

question 100

Multiple Choice

A company has a debt to assets ratio of .45. If the company then borrows cash from the bank to finance a building acquisition, which of the following is a true 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

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Definitions:

Employees

Individuals who are hired by an employer to perform specific duties or services in exchange for remuneration, forming the workforce of a company or organization.

Principal

In legal and financial contexts, the main party to a transaction or the original amount of money invested or loaned, before interest.

Independent Contractor

An individual or entity contracted to perform work for another entity as a non-employee, thus not entitled to employee benefits and subject to different tax treatment.

Agent

A person who is authorized to act for or in the place of another person (the principal).