What does a Debt Ratio greater than one signify? Option: "The company's operating profits are insufficient to cover interest charges", "The company has a high debt-to-equity ratio", "The company has more debt than assets", "The company has a low risk of default"

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What does a Debt Ratio greater than one signify?

"The company's operating profits are insufficient to cover interest charges"

"The company has a high debt-to-equity ratio"

"The company has more debt than assets"

"The company has a low risk of default"

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What does a Debt to Equity ratio of 1 signify?

The company has no debt.

The company has more equity than debt.

The company has more debt than equity.

The company has an equal amount of debt and equity.

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What does a Debt-to-Equity ratio indicate about a company?

"Profitability and return on investment"

"Market share and competitive advantage"

"Operational efficiency and asset utilization"

"The level of leverage and financial risk"

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Why is a high level of debt generally considered unfavorable when evaluating a company for investment?

It demonstrates the company's ability to secure favorable financing terms from lenders

It suggests the company is using debt strategically for growth and expansion

It signifies high financial leverage, which can be risky, and the finance cost reduces earnings

It indicates the company is highly profitable and reinvesting its earnings

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What does the Debt-to-Equity Ratio measure?

"The ratio of a company's debt to its equity"

"The company's ability to pay off its debts by selling physical assets"

"The company's ability to pay off its debts without selling assets"

"The percentage of a company's assets funded by debt"

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Which ratio helps assess if a company has enough physical assets to pay off its debts?

"Debt Ratio"

"Operating Cash Flows to Total Debt Ratio"

"Debt-to-Equity Ratio"

"Debt-to-Tangible Net Worth Ratio"