Why Is It Important to Monitor Your Debt Level

question 120

Multiple Choice

Why is it important to monitor your debt level?

• A) So it does not become so high that you cannot cover the monthly payments
• B) So that you maintain a liquidity ratio of at least 2.5
• C) In order to qualify for another credit card to capture the introductory points
• D) So that your total debt does not exceed your annual income

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that serve as a global framework for the preparation of public company financial statements.

Premium Account

An upgraded account or service that a customer opts for, typically providing additional features or benefits for an extra cost.

Discount Account

An account that represents the difference between a bond's face value and its selling price when it is sold at less than its face value.

Debt to Assets Ratio

A financial ratio that measures the percentage of a company's assets financed by creditors through debt, indicating the degree of financial leverage.