Z-Mart is a large retailer.Its debt-to-equity ratio last year was 0.82 and its interest-coverage ratio was 20.5.The industry averages for these two ratios are 0.68 and 24.59, respectively.Based on that information, which of the following statements is true?

Question

Quizplus · Accepted Answer

Z-Mart's debt-to-equity ratio is higher than the industry average, indicating that it has a relatively higher level of debt in its capital structure. However, its interest-coverage ratio is lower than the industry average, indicating that it may have a higher difficulty in paying its interest expenses compared to the industry average. Therefore, option A is correct as it states that Z-Mart has more debt in its capital structure than the average for the industry.

Z-Mart Is a Large Retailer