The Debt/equity Ratio Will Increase If a Company

question 37

Multiple Choice

The debt/equity ratio will increase if a company

• A)pays off its long-term debt.
• B)decides to pay cash for more of its capital purchases.
• C)purchases long-term investments for cash.
• D)declares more current cash dividends.

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Definitions:

Preferred

Refers to something that is more desirable or favored over other options.

Indifference Curve

A graphical representation showing different combinations of two goods that provide equal satisfaction and utility to a consumer.

Total Utility

The cumulative satisfaction or value that a consumer derives from consuming a given amount or number of goods or services.

Indifference Curve

A graph showing different combinations of two goods between which a consumer is indifferent.