At Sips and Chips, a Local Cybercafé, a Financial Manager

question 13

Multiple Choice

At Sips and Chips, a local cybercafé, a financial manager has calculated the debt-to-equity ratio and discovered it is equal to one. What does this indicate about Sips and Chips?

• A) It is relying exclusively on debt financing to meet its long-term financing needs.
• B) It is relying on equal amounts of debt and equity financing.
• C) It has an equal amount of current assets and current liabilities.
• D) It is at risk of being unable to pay its short-term debts when they come due.

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Definitions:

Piaget

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