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Which one of the following statements is correct? If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0. O Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5. The debt-equity ratio cannot be expressed as the equity multiplier minus 1. Equity multiplier should be greater or equal to 1. An increase in the depreciation expense will affect the cash coverage ratio.

Which one of the following statements is correct? If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0. O Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5. The debt-equity ratio cannot be expressed as the equity multiplier minus 1. Equity multiplier should be greater or equal to 1. An increase in the depreciation expense will affect the cash coverage ratio.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Which one of the following statements is correct? If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0. Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5. The debt-equity ratio cannot be expressed as the equity multiplier minus 1. Equity multiplier should be greater or equal to 1. An increase in the depreciation expense will affect the cash coverage ratio.
Transcribed Image Text:Which one of the following statements is correct? If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0. Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5. The debt-equity ratio cannot be expressed as the equity multiplier minus 1. Equity multiplier should be greater or equal to 1. An increase in the depreciation expense will affect the cash coverage ratio.
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