The Lower the Debt Ratio,​

question 7

Multiple Choice

The lower the debt ratio,​

• A) ​the higher is the use of financial leverage
• B) ​the lower is the use of financial leverage
• C) ​the lower are the firm's total assets
• D) ​the higher are the firm's total assets

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or used up within one year or within the normal operating cycle of the business, whichever is longer.

Current Liabilities

A company's debts or obligations that are due within one year.

Quick Ratio

A measure of a company's ability to meet its short-term liabilities with its most liquid assets, providing insights into financial health.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business, whichever is longer.