Which of the Following Is Not a True Statement

question 2

Multiple Choice

Which of the following is not a true statement?

• A)The debt to equity ratio measures a company's risk and is calculated as total liabilities divided by stockholders' equity.
• B)Leverage enables a company to earn a higher return using debt than without debt.
• C)Return on assets is calculated as net income divided by the ending balance for total assets.
• D)The times interest earned ratio compares interest expense with income available to pay interest charges.

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Definitions:

Liability

A cost when a corporate’s responsibility has not been met.

Partnership

Exists when two or more persons associate to conduct a business.

Regulations

Regulations are rules or directives made and maintained by an authority to control or govern behavior within a specific system.

Intrinsic Value

The inherent worth of an asset, security, or company that is determined through analytical methods and underlying perceptions of its true value, beyond its current market price.