If a Company Is Financing More Assets with Debt Than

question 120

Multiple Choice

If a company is financing more assets with debt than with equity,the ________.

• A) debt to equity ratio will be more than 1
• B) debt to equity ratio will be between 0 to 1
• C) debt to equity ratio will be equal to 1
• D) debt to equity ratio will be negative

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Definitions:

Stimulus Package

A package of economic measures put together by a government to stimulate a floundering economy, typically through a combination of spending increases and tax reductions.

Economic Downturn

A period of negative growth in an economy, characterized by a decrease in the GDP, employment, and spending.

Inflation

The frequency at which the average pricing for goods and services uplifts, subsequently reducing the power of procurement.

Opportunity Cost

The value of the best alternative forgone, where a choice needs to be made between several mutually exclusive alternatives under conditions of scarcity.