The Debt Ratio of Jackson's Shoes Is 0

question 149

Multiple Choice

The debt ratio of Jackson's Shoes is 0.9 and the debt ratio of Billy's Catering is 1.0. Based on this information, an investor can conclude:

• A)Billy's Catering finances a relatively lower portion of its assets with liabilities than Jackson's Shoes.
• B)Billy's Catering has a lower risk from its financial leverage.
• C)Jackson's Shoes has a higher risk from its financial leverage.
• D)Billy's Catering has the exact same dollar amount of total liabilities and total assets.
• E)Jackson's Shoes has less equity per dollar of assets than Billy's Catering.

---

Definitions:

Informational Power

Power derived from the possession, control, or access to information that is needed or valued by others.

Reward Power

Reward power is a form of social influence based on the ability to control the allocation of rewards valued by others, thereby modifying their behavior in a desired direction.

Knowledge Power

The idea that possessing knowledge grants an individual or group increased control, influence, or ability in decision-making processes.

Membership Groups

Groups to which individuals belong, where membership is often defined by shared characteristics, interests, or goals.