Long-Term Creditors Consider a Lower Debt to Assets Ratio to Be

question 64

True/False

Long-term creditors consider a lower debt to assets ratio to be less risky.

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Definitions:

Dividends in Arrears

Unpaid dividends on cumulative preferred stock which must be paid out before any dividends can be distributed to common stockholders.

Dividends Payable

A liability on a company's balance sheet representing the amount owed to shareholders in the form of dividends that have been declared but not yet paid.

Cumulative

Referring to the aggregate or total amount accumulated over a period of time, often used in the context of dividends or records.

Preferred Stockholders

Investors who own preferred shares in a company, having priority over common stockholders in receiving dividends and assets upon liquidation.