Multiple Choice
All of the following statements accurately describe the debt ratio except.
A) The dividing line for a high and low ratio varies from industry to industry.
B) The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.
C) A relatively high ratio is always desirable.
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) It is of use to both internal and external users of accounting information.
Correct Answer:

Verified
Correct Answer:
Verified
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