An increase in assets financed by equity increases the debt ratio.

Name: An increase in assets financed by equity increases the debt ratio.
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Question

Quizplus · Accepted Answer

An increase in assets financed by equity does not increase the debt ratio; instead, it increases the equity portion of the financing, leaving the debt ratio either unchanged or potentially lower if the total assets increase while debt remains constant.

An Increase in Assets Financed by Equity Increases the Debt