A Company Wants to Maintain Its Current Debt/equity Ratio

question 25

Multiple Choice

A company wants to maintain its current debt/equity ratio. Which of the following relationships would most likely occur on the cash flow statement?

• A) Cash from operations would be equal to any debt paid off during the year.
• B) New borrowings would replace any debt paid off.
• C) New borrowings would be less than cash from operations for the year.
• D) Cash from operations would be equal to cash from financing activities for the year.

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