Which of the Following Statements Is Correct

question 70

Multiple Choice

Which of the following statements is correct?

• A) Generally, debt-to-total-assets ratios do not vary much among different industries, although they do vary among firms within a given industry.
• B) Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.
• C) Drug companies (prescription, not illegal!) generally have high debt-to-equity ratios because their earnings are very stable and, thus, they can cover the high interest costs associated with high debt levels.
• D) Wide variations in capital structures exist both between industries and among individual firms within given industries. These differences are caused by differing business risks and also managerial attitudes.

---

Definitions:

Self-Regulation

An individual’s ability to prevent himself or herself from making a dominant, preferred or automatic response in order to perform a nondominant response, such as when a hungry person is served food at a restaurant but waits to eat until everyone at the table has been served.

Precursor

An element, condition, or event that precedes and indicates the approach of something.

Recognition Skills

are the abilities to identify and acknowledge information, objects, or situations based on previous experiences or knowledge.

Infants

Very young children or babies, typically those under one year of age, who are in the earliest stages of development.