Answered: debt-to-equity ratio

Business

Accounting

debt-to-equity ratio

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Excel Industries has a debt-to-equity ratio of 1.5 compared with the industry average of 1.3. This means that the company ________________.

Will not experience any difficulty with its creditors

Has less liquidity than other firms in the industry

Will be viewed as having high creditworthiness

Has greater than average financial risk when compared to others in the industry

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