A Decrease in the Debt Ratio Will Normally Have No

question 46

Multiple Choice

A decrease in the debt ratio will normally have no effect on:

• A) financial risk
• B) business risk
• C) total risk
• D) systematic risk

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting its liquidity, operational capabilities, and financial health.

Statement

A record that summarizes financial activities, such as income and expenses, over a specific period.

Design Services

Professional services that envision and plan the construction, functionality, and aesthetics of various projects or components.

Accounting Equation

The fundamental equation of double-entry bookkeeping: Assets = Liabilities + Equity, representing the relationship between an entity’s resources and how those resources are financed.