Which of the Following Statements Describing the Debt Ratio Is

Multiple Choice

Which of the following statements describing the debt ratio is false?

A) It is of use to both internal and external users of accounting information.
B) A relatively high ratio is always desirable.
C) The dividing line for a high and low ratio varies from industry to industry.
D) Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.
E) The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.