A Note of Caution in Interpreting the Debt Ratio Is

Multiple Choice

A note of caution in interpreting the debt ratio is that

A) all debt decreases liquidity ratios.
B) financing arrangements, such as leases, may be off-balance sheet arrangement and not be classified as debt on the balance sheet.
C) financing arrangements, such as leases, may be classified as debt when in fact they do not require interest payments.
D) long-term debt may be inflated because of a desire to reduce the current ratio.