A company has a debt-to-equity ratio of 150%.The more debt a company has,and the less stockholders' equity,the
A)greater the probability that the company will report a contingency.
B)lower the probability that the company will report a contingency.
C)riskier it is to lend money to the firm.
D)riskier it is to purchase fixed assets.
E)none of the above

Question

Quizplus · Accepted Answer

A high debt-to-equity ratio indicates that the company has more debt compared to shareholders' equity. This means that the company has a higher risk of defaulting on its debt obligations, making it riskier to lend money to the firm. This does not necessarily affect the probability of reporting contingencies or purchasing fixed assets.

A Company Has a Debt-To-Equity Ratio of 150