A High Debt Ratio Is Preferable to a Low Debt

question 96

True/False

A high debt ratio is preferable to a low debt ratio, whereas a low current ratio is preferable to a high current ratio.

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Definitions:

Average Accounting Return

A financial ratio indicating the average profitability of investments, calculated as the average annual net income divided by the average book value.

IRR

Internal Rate of Return, a metric used in financial analysis to estimate the profitability of potential investments.

Arbitrary Cutoff Number

A designated numerical limit set without a specific rationale or basis, often used for categorization or decision-making.

Decision Rule

A guideline or criterion for making a choice between alternatives, especially in analysis or planning.