Users of Financial Statements Consider a Lower Debt to Total

question 24

Multiple Choice

Users of financial statements consider a lower debt to total assets ratio to be

• A)worse because it indicates higher risk of defaulting on debt payments.
• B)better because it indicates that a company has lower leverage.
• C)worse because it indicates reduced risk of defaulting on debt payments.
• D)better because it indicates that a company has higher leverage.

---

Definitions:

Beneficiaries

Individuals or groups that receive benefits or advantages from actions, policies, or trusts, often in the context of insurance, inheritance, or social programs.

Society

A broad term defining a group of individuals living together in a more or less ordered community, sharing customs, laws, and organizations.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to market equilibrium.

Equilibrium Quantity

The amount of products or services available matches precisely the amount desired by consumers at the current market rate.