What Kind of Information Does a Company's Debt Ratio Provide

question 26

Multiple Choice

What kind of information does a company's debt ratio provide?

• A) What proportion of the company's debts are long-term liabilities
• B) What proportion of the company's assets are financed by debt, as opposed to equity
• C) How well a company is positioned to pay off all of its long-term debt
• D) How much profit is generated by each share of stock

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Definitions:

Revised Model Business Corporation Act

An updated model statue designed to serve as a comprehensive guide for the structuring and governance of corporations in the United States.

Fiduciary Duty of Care

A legal obligation of one party to act in the best interest of another when entrusted with the care of their assets or interests.

Stock Subscription Agreement

A legal contract outlining the purchase of shares in a company by investors under specific terms and conditions.

Watered Stock

Stock that is issued to individuals below its fair market value.