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.

---

Definitions:

Economic Infrastructure

The underlying physical and organizational structures needed for the operation of a society or enterprise, such as transportation and communication systems.

Distribution Systems

Networks that a company uses to get its products from the manufacturer to the end consumer.

Exporting

A global market-entry strategy in which a company produces products in one country and sells them in another country.

Global Market Entry Strategy

Plans and methodologies developed by businesses to enter international markets, considering factors like market analysis, entry mode, and competitive dynamics.