Indicate Whether Each of the Following Statements About Financial Statement

question 3

Short Answer

Indicate whether each of the following statements about financial statement analysis is true or false.
_____ a)Solvency ratios measure a company's short-term debt paying ability and its financial structure.
_____ b)A company with a high debt to assets ratio probably would be considered to have a high level of financial risk.
_____ c)The debt to equity ratio and debt to assets ratio are two ways to measure the same relationship.
_____ d)From the point of view of stockholders,a decline in the debt to equity ratio is always good news.
_____ e)The lower the debt to equity ratio,the higher a company's financial leverage.

---

Definitions:

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the principal, paid over a specific period.

Federal Reserve

The central banking system of the United States, which regulates the U.S. money supply and is responsible for monetary policy.

Money Supply

Money supply is the total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage rate of the loan outstanding.