If the Debt to Equity Ratio Is Greater Than 1

question 64

Multiple Choice

If the Debt to Equity Ratio is greater than 1 it means.

• A)The company is using debt more than owners' equity to finance its assets
• B)The company has less debt than equity
• C)The company has more debt than assets
• D)The company is using more of its assets to finance its debt

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Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated at the beginning of the period based on estimated costs and activity levels.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the manufacturing process or providing a service.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, indirect labor, and materials.

Work in Process

Inventory that includes all materials, labor, and overhead costs for products that are in the process of being manufactured but are not yet completed.