The higher a company's debt ratio, the lower the risk of a company not being able to meet its obligations.

Question

Quizplus · Accepted Answer

The statement is false. The higher a company's debt ratio, the higher the risk of a company not being able to meet its obligations, as it means that the company has a larger portion of debt compared to equity. This increases the company's financial leverage and may make it more difficult for the company to make interest payments and repay debts.

The Higher a Company's Debt Ratio, the Lower the Risk