Which one of the following statements is true?Group of answer choicesLow debt ratio means most of the assets are financed by debt.Low debt ratio means most of the assets are financed by equity.Too little debt will reduce the business’s long-term flexibility.High debt ratio means most of the assets are financed by equity.

A debt to total assets ratio of 80%: Group of answer choices means that 20% of investment in assets has been provided by lenders. is undesirable for creditors. is desirable for creditors. is likely to be supported by cyclical entities that have fluctuating profits, such as many high-tech companies.

Which of the following statements is not true? A. The sum of the debt ratio and the equity ratio does not have to equal 100%. B. The debt ratio indicates how many dollars of debt exist per dollar of assets. C. If the debt to equity ratio is more than 100%, the entity is more reliant on debt funding than equity funding. D. If the equity ratio is less than 50% then the entity is more reliant on debt funding than equity funding.

Which of the following statements is NOT TRUE?Debt is costlier than equity.For the same business the firm can choose between the use of debt capital versus equity capital.Net profit can be substantially higher if debt is usedAll of the above

Which of these ratios is not a measure of the ability of an entity to pay its debts?Group of answer choicesWorking capital ratio.All of the given options are measures of the ability of an entity to pay its debts.Quick ratio.Interest coverage ratio.

Which of the following statements is incorrect?1 pointThe higher the debt-to-equity ratio, the more profit the company has recordedThe higher the debt-to-equity ratio, the more debt the company has on its balance sheetA high debt-to-equity ratio means the company has a lot of debt in relation to equityThe debt-to-equity ratio analyzes the relationship between total liabilities and total equity