Multiple Choice
All of the following statements regarding the ratio of liabilities to stockholders' equity are true except
A) A ratio of 1 indicates that liabilities equal stockholders' equity.
B) The ratio is calculated as total liabilities divided by total stockholders' 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 is, the better able a business is to withstand poor business conditions and pay creditors.
Correct Answer:
Verified
Correct Answer:
Verified
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