Which of the Following Statements Is True of the Debt

question 123

Multiple Choice

Which of the following statements is true of the debt to equity ratio?

• A)The higher the debt to equity ratio, the lower the company's financial risk.
• B)The higher the debt to equity ratio, the greater the company's financial risk.
• C)If the debt to equity ratio is greater than 1, then the company is financing more assets with equity than with debt.
• D)If the debt to equity ratio is less than 1, then the company is financing more assets with debt than with equity.

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Definitions:

Consigned Merchandise

Goods that are sent by their owner (consignor) to an agent (consignee), who tries to sell the goods for a fee without taking ownership.

Buying Habits

Patterns or tendencies that consumers exhibit when making purchasing decisions.

Ending Inventory

The total value of goods available for sale at the end of an accounting period.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating its financial health over a specific period.