Which Statement Relating to the Debt Ratio of a Company

question 19

Multiple Choice

Which statement relating to the debt ratio of a company is not true?

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

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Definitions:

Adrenal Cortex

The outer part of the adrenal gland that produces essential hormones like cortisol and aldosterone, which regulate metabolism, blood pressure, and stress response.

Hypotonic

Describes a solution that has a lower osmotic pressure than another fluid, often causing cells to swell as water moves into them.

Isotonic

Refers to a solution that has the same salt concentration as the cells and the blood of the body or to muscle movements where tension remains unchanged and the muscle's length changes.

Hypertonic

Referring to a solution that has a higher concentration of solutes than another solution, leading to osmosis.