All of the Following Statements Regarding the Ratio of Liabilities

question 210

Multiple Choice

All of the following statements regarding the ratio of liabilities to stockholders' equity are true except

• A) a ratio of 1 indicates that liabilities equal stockholders' equity
• B) sole proprietorships can use this ratio but substitute total owner's equity for total stockholders' equity
• C) the higher this ratio, the better able a business is to withstand poor business conditions and pay creditors
• D) the lower this ratio, the better able a business is to withstand poor business conditions and pay creditors

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Definitions:

Behavioral Observation Scale

A method used in performance appraisal that involves rating the frequency of observed behavior.

Rating Scale

A method for assigning a value to a person's performance or characteristics, often in the form of a numbered or descriptive scale.

Alternation Ranking

A method of evaluating employees where individuals are compared and ranked alternately in terms of best and worst performance.

Performance Measurement

Performance measurement involves the evaluation of the effectiveness and efficiency of an individual, group, or organization's work activities and results.