The larger the debt-to-equity ratio,the riskier the situation is for lenders and borrowers.

Question

Quizplus · Accepted Answer

A higher debt-to-equity ratio indicates that a company or individual is financing a larger portion of their operations through debt rather than through equity. This increases financial leverage, but also risk, as it may lead to difficulties in repaying the debt, especially during financial downturns, making the situation riskier for both lenders and borrowers.

The Larger the Debt-To-Equity Ratio,the Riskier the Situation Is for Lenders