Multiple Choice
All of the following statements regarding the ratio of liabilities to stockholders' equity are true except
A) a ratio of 1 indicates that liabilities equal stockholders' equity
B) sole proprietorships can use this ratio but substitute total owner's equity for total stockholders' equity
C) the higher this ratio, the better able a business is to withstand poor business conditions and pay creditors
D) the lower this ratio, the better able a business is to withstand poor business conditions and pay creditors
Correct Answer:
Verified
Correct Answer:
Verified
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