Which one of the following statements is correct? If the debt-to-assets ratio is greater than 0.50, then the debt-to-equ
Posted: Sun May 08, 2022 10:12 am
Which one of the following statements is correct?
If the debt-to-assets ratio is greater than 0.50, then the
debt-to-equity ratio must be less than 1.0.
Long-term creditors would prefer the times-interest-earned ratio
be 1.4 rather than 1.5.
The assets-to-equity ratio can be computed as 1 plus the
debt-to-equity ratio.
To realize the best risk and reward profile, financial leverage
should be maximized.
If the debt-to-assets ratio is greater than 0.50, then the
debt-to-equity ratio must be less than 1.0.
Long-term creditors would prefer the times-interest-earned ratio
be 1.4 rather than 1.5.
The assets-to-equity ratio can be computed as 1 plus the
debt-to-equity ratio.
To realize the best risk and reward profile, financial leverage
should be maximized.