Which of the Following Statements Relating to the Debt Ratio

question 32

Multiple Choice

Which of the following statements relating to the debt ratio of a company is incorrect?

• A) It is an indicator of a company's long-term solvency.
• B) It is a measure of the extent of a company's gearing.
• C) It can be calculated by relating liabilities to total funds.
• D) A higher level of debt is normally preferable from a creditor's point of view.

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