Multiple Choice
Which of the following statements is true about the debt to equity ratio?
A) The greater the debt to equity ratio the smaller the opportunity to increase the return on equity of a firm through financial leverage.
B) The greater the debt to equity ratio the greater the chance the firm will not meet its debt obligations.
C) The size of a of a company's debt to equity ratio is directly related to amount of a firm's sales.
D) The lower the debt to equity ratio the higher the risk that financial leverage will have a negative impact on a firm's return on equity.
Correct Answer:
Verified
Correct Answer:
Verified
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