From a Creditor's Point of View the Higher the Total

question 58

True/False

From a creditor's point of view the higher the total debt to total assets ratio the lower the risk that the company may be unable to pay its obligations.

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Definitions:

Accounts Receivable

Outstanding payments from customers to a firm for received goods or services that remain unpaid.

Financial Plan

A comprehensive evaluation of an individual's current pay and future financial state by using current known variables to predict future income, asset values, and withdrawal plans.

Shareholder Wealth

The total value of an individual's ownership stake in a publicly traded corporation, often measured in terms of stock price appreciation plus dividends received.

Sustainable Growth Rate

The highest speed at which a firm can increase its revenue, profits, and dividends without raising its financial borrowing.