Which of the Following Statements Is an Accurate Interpretation of the Debt

question 162

Multiple Choice

Which of the following statements is an accurate interpretation of the debt ratio?

• A) A debt ratio of 0.60 or lower is considered a high-risk ratio.
• B) A debt ratio above 1.00 is considered a good, safe ratio.
• C) A debt ratio of 2.0 indicates very strong ability to pay liabilities.
• D) A debt ratio of 0.60 or lower is a good, safe ratio.

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Definitions:

Standard Direct Labour Rate

Standard direct labour rate is the predefined cost allocated for the direct labour per hour that is expected to be incurred in the production process.

Actual Direct Labour Hours

Actual direct labor hours refer to the real number of labor hours spent by workers directly involved in the production process.

Standard Cost System

An accounting system that uses standard costs for product costs, facilitating budgeting and performance evaluation.

Direct Labour Hours

The total time workers spend producing a product or service, which directly correlates to the production.