When examining the debt to equity ratio of a company, consideration should be given to pension liabilities. Specifically, it should be determined if the projected benefit obligation significantly exceeds the plan assets and if it does compare this to any liability recorded on balance sheet.

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Quizplus · Accepted Answer

This is true because pension liabilities can have a significant impact on a company's financial health and its debt to equity ratio. If the projected benefit obligation significantly exceeds the plan assets, it could indicate potential future cash flow challenges for the company, which should be taken into consideration when evaluating its overall financial position. Furthermore, if there is a liability recorded on the balance sheet, this could impact the company's debt to equity ratio and should be factored into any analysis.

When Examining the Debt to Equity Ratio of a Company