Which of the Following Statements Is False When Describing the Debt

question 88

Multiple Choice

Which of the following statements is false when describing the debt ratio?

• A)It is of use to both internal and external users of accounting information
• B)A relatively high ratio is desirable
• C)The dividing line between a high and low ratio varies from industry to industry
• D)Many factors such as company's age,stability,profitability,and cash flow influence the determination of what would be interpreted as a high versus a low ratio
• E)The ratio might be used to help determine if a company could be capable of increasing its income by going into further debt

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Definitions:

Keynesian

Relating to the economic theories of John Maynard Keynes, advocating for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of depression.

Classical

Pertains to the classical school of economic thought, focusing on free markets and the self-regulating nature of economies, emphasizing the roles of competition and supply and demand.

Monetarists

Monetarists are economists who believe that variations in the money supply have major influences on national output in the short run and the price level over longer periods.

Supply Side

An economic theory that emphasizes the importance of increasing production and supply as a way to stimulate economic growth, often through tax cuts and deregulation.