If Company a Has a Debt-To-Assets Ratio of 0

question 115

Multiple Choice

If Company A has a debt-to-assets ratio of 0.73 while Company B has a debt-to-assets ratio of 0.45,which of the following statements is correct?

• A)Stockholders own a smaller proportion of Company A than Company B.
• B)Company A must make less profit than Company B.
• C)Creditors own a smaller proportion of Company A than Company B.
• D)Company A must have fewer assets than Company B.

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Definitions:

Wrongful Discharge Suit

A legal claim brought by an employee against an employer, alleging termination of employment for unlawful reasons.

Legitimate Business Reasons

Justifiable, lawful motives driving business decisions or actions, typically based on economic, efficiency, or policy considerations.

Employment-At-Will Rule

A legal doctrine stating that an employer can terminate an employee at any time without any reason, as long as it is not unlawful.

Public Policy Exception

An exception to the enforcement of contracts or agreements when they conflict with the public interest or established norms of fairness and justice.