GDS Cutoff: 30 Percent

question 36

Multiple Choice

GDS cutoff: 30 percent
TDS cutoff: 35 percent
Using only the TDS criteria,which one of the following statements is true?

• A)Joe gets the loan,but Bill does not.
• B)Bill gets the loan,but Joe does not.
• C)Both get the loan.
• D)Neither gets the loan.
• E)The bank does not have money to make the loan.

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Definitions:

Total Debt Ratio

A financial metric that divides the total liabilities of a company by its total assets.

Capital Structure

The mix of different forms of funds used by a company to finance its overall operations and growth, including debt, equity, and hybrid instruments.

Equity Financing

The process of raising capital through the sale of shares in a company to investors.

Du Pont Identity

A formula that breaks down Return on Equity (ROE) into three component parts: profit margin, asset turnover, and financial leverage, to analyze a company’s financial performance.