Which one of the following statements is correct?
A) If the debt-to-assets ratio is greater than 0.50, then the debt-to-equity ratio must be less than 1.0.
B) Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5.
C) The assets-to-equity ratio can be computed as 1 plus the debt-to-equity ratio.
D) To realize the best risk and reward profile, financial leverage should be maximized.
E) None of the above is correct.

Question

Quizplus · Accepted Answer

The assets-to-equity ratio is calculated as 1 plus the debt-to-equity ratio, reflecting the relationship between total assets, total equity, and total debt.

Which One of the Following Statements Is Correct