All of the Following Statements Regarding the Ratio of Liabilities

question 105

Multiple Choice

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

• A) a ratio of 1 indicates that liabilities equal owner's equity
• B) corporations can use this ratio but substitute total stockholders' equity for total owner's 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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Cultural Competence

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United States

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