Question
In: Accounting
The lower the debt to equity ratio, the greater the company's financial risk. True False
The lower the debt to equity ratio, the greater the company's financial risk. True False
Solutions
Expert Solution
Ans. False
Explanation: The higher debt to equity ratio indicates the higher risk and the lower Debt to equity ratio indicates the lower financial risk.
ekkarill92 answered 2 years agoRelated Solutions
Explain the major financial ratios and financial cycles, debt ratio, debt to equity ratio, return on...
Explain the major financial ratios and financial cycles, debt
ratio, debt to equity ratio, return on assets, return on equity,
current ratio, quick ratio, inventory turnover, days in inventory,
accounts receivable turnover, accounts receivable cycle in days,
accounts payable turnover, accounts payable cycle in days, earnings
per share (EPS), price to earnings ratio (P/E), and cash conversion
cycle (CCC) and state the significance of each for financial
management. Include examples based on a hypothetical balance sheet
and income statement.
Explain the major financial ratios and financial cycles, debt ratio, debt to equity ratio, return on...
Explain the major financial ratios and financial cycles, debt
ratio, debt to equity ratio, return on assets, return on equity,
current ratio, quick ratio, inventory turnover, days in inventory,
accounts receivable turnover, accounts receivable cycle in days,
accounts payable turnover, accounts payable cycle in days, earnings
per share (EPS), price to earnings ratio (P/E), and cash conversion
cycle (CCC) and state the significance of each for financial
management. Include examples based on a hypothetical balance sheet
and income statement.
Can...
the higher the debt rating, the greater the risk of default on a financial obligation
the
higher the debt rating, the greater the risk of default on a
financial obligation
11) Which of the following statements is true about the debt toequity ratio?The greater...
11) Which of the following statements is true about the debt to
equity ratio?The greater the debt to equity ratio the smaller the
opportunity to increase the return on equity of a firm through
financial leverage.The lower the debt to equity ratio the higher the risk that
financial leverage will have a negative impact on a firm's return
on equity.The size of a of a company's debt to equity ratio is directly
related to amount of a firm's sales.The greater...
The debt-equity ratio determines the amount of _____ risk that is associated with a firm. business...
The debt-equity ratio determines the amount of _____ risk that
is associated with a firm.
business
systematic
unsystematic
financial
The debt-equity ratio determines the amount of _____ risk that is associated with a firm. business...
The debt-equity ratio determines the amount of _____ risk that
is associated with a firm.
business
systematic
unsystematic
financial
Maximum Debt-Equity Ratio: What ratio of debt to equity maximizes the shareholders' interests?
Maximum Debt-Equity Ratio: What ratio of debt to equity
maximizes the shareholders' interests?
A company's target debt-to-equity ratio is 1.25. Its CPMC is 9% and the tax rate is...
A company's target debt-to-equity ratio is 1.25. Its CPMC is 9%
and the tax rate is 35%. If the cost of equity is 14% what is the
cost of debt before tax?
A company's CFO wants to maintain a target debt-to-equity ratio of 1/3. If the WACC is...
A company's CFO wants to maintain a target debt-to-equity ratio
of 1/3. If the WACC is 18.6%, and the pretax cost of debt is 9.4%,
what is the cost of common equity assuming a tax rate of 33%?
16.40%
20.90%
21.70%
23.93%
If a firm's debt ratio is greater than 100% and its net debt to EBITDA ratio...
If a firm's debt ratio is greater than 100% and its net debt to
EBITDA ratio is 1.0x, the firm is:
A debt ratio can never be over 100%.
probably over-leveraged.
not necessarily over- or under-leveraged, but does need to raise
equity capital.
probably under-leveraged.
Question 2
2 Points
The number of shares repurchased and/or issued in a given period
are shown on the:
statement of shareholders equity.
cash flow statement.
balance sheet.
income statement.
Question 3
2 Points
Of...
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