Which of the Following Statements Is True of the Debt

Multiple Choice

Which of the following statements is true of the debt to equity ratio?

A) The higher the debt to equity ratio, the lower the company's financial risk.
B) The higher the debt to equity ratio, the greater the company's financial risk.
C) If the debt to equity ratio is greater than 1, then the company is financing more assets with equity than with debt.
D) If the debt to equity ratio is less than 1, then the company is financing more assets with debt than with equity.