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:

Sympathetic Nervous System

A division of the autonomic nervous system responsible for the body's 'fight or flight' response, activating in times of stress or danger.

Parasympathetic Nervous System

A division of the autonomic nervous system responsible for "rest and digest" functions, counterbalancing the sympathetic nervous system's "fight or flight" responses.

Autonomic Nervous System

The part of the nervous system that controls involuntary bodily functions, such as heart rate, digestion, and respiratory rate.

Somatic Nervous System

Part of the peripheral nervous system that handles voluntary control of body movements through the action of skeletal muscles.