Which One of the Following Statements Is Correct

question 51

Multiple Choice

Which one of the following statements is correct?

• A) If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0.
• B) Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5.
• C) The debt-equity ratio can be computed as 1 plus the equity multiplier.
• D) An equity multiplier of 1.2 means a firm has $1.20 in sales for every $1 in equity.
• E) An increase in the depreciation expense will not affect the cash coverage ratio.

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Definitions:

Boycott

A form of protest involving the refusal to buy, use, or participate in something as a way of expressing disapproval or forcing change.

British Imports

Goods and products brought into a country from the United Kingdom, which can include a wide range of items from tea to machinery.

Daughters Of Liberty

A group of women who participated in the American Revolutionary War efforts by boycotting British goods and producing homemade items to aid the patriot cause.

Spun

In a general context, it means to twist together strands to make yarn or thread, but can also refer metaphorically to presenting information in a particular way to influence perception.