If a firm has a debt to owners' equity ratio of .54 or 54%)we can conclude that:
A)It has relied more on debt than equity to finance its operations.
B)The firm is likely to have trouble paying its short term debts when they come due.
C)Its total liabilities are less than its owners' equity.
D)The firm has expenses that are exactly 54% of its gross profit.

Question

Quizplus · Accepted Answer

A debt to equity ratio of 0.54 means that the firm's total liabilities are 54% of its owners' equity, indicating that liabilities are less than equity.

If a Firm Has a Debt to Owners' Equity Ratio