All of the Following Statements Regarding the Ratio of Liabilities

Multiple Choice

All of the following statements regarding the ratio of liabilities to owner's equity are true except

A) a ratio of 1 indicates that liabilities equal owner's equity
B) corporations can use this ratio but substitute total stockholders' equity for total owner's equity
C) the higher this ratio, the better able a business is to withstand poor business conditions and pay creditors
D) the lower this ratio, the better able a business is to withstand poor business conditions and pay creditors