It is unattractive to borrow any further funds when:
A)the average borrowing costs start to equal or exceed the ROE.
B)the average borrowing costs start to equal or exceed the ROA.
C)the company's net profit margin falls below the average borrowing costs.
D)the company's debt-to-equity ratio exceeds 50%.

Question

Quizplus · Accepted Answer

When the average borrowing costs start to equal or exceed the Return on Assets (ROA), it indicates that the company is not generating enough returns from its assets to cover the cost of borrowing, making it unattractive to borrow further.

It Is Unattractive to Borrow Any Further Funds When