Which of the Following Statements Describing the Debt Ratio Is

question 95

Multiple Choice

Which of the following statements describing the debt ratio is ?

• A) It is of use to both internal and external users of accounting information.
• B) A relatively high ratio is always desirable.
• C) The dividing line for a high and low ratio varies from industry to industry.
• D) Many factors such as a 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 is capable of increasing its income by obtaining further debt.

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