The Debt-To-Equity Ratio Is Calculated by Dividing Your Total Liabilities

question 78

True/False

The debt-to-equity ratio is calculated by dividing your total liabilities by your net worth.

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Definitions:

Accounts Payable

A liability to a creditor, carried on an open account, usually for purchases of goods and services.

Net Income

The income that remains in a business after all costs and expenses have been subtracted from total revenue, indicative of the financial performance.

Cash Flow Hedge

A financial instrument intended to offset potential losses or gains that could be incurred by future cash flows, acting as a buffer against currency, interest rate, or commodity price changes.

Forward Exchange Contract

A financial derivative that locks in the exchange rate at which a currency can be bought or sold on a future date.