Which of the Following Statements Is False When Describing the Debt

question 179

Multiple Choice

Which of the following statements is false when describing the debt ratio?

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

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Definitions:

Negated

Made ineffective or invalidated; in logic, a proposition that denies or contradicts another proposition.

Raining

The process of precipitation in the form of water droplets falling from clouds in the atmosphere to the ground.

Not Raining

The condition of the weather where no precipitation is occurring.

If-then Statement

A logical conditional statement stating that if one thing happens, then another will as well, expressing a causal or inferential relationship.