A debt-to-equity method provides a quick idea of one's financial solvency.The larger the ratio,the riskier the likelihood of repayment.

Question

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A higher debt-to-equity ratio indicates that a company has more debt than equity, which means they have a higher risk of being unable to repay their debts, therefore increasing their financial risk. Conversely, a lower ratio indicates that the company has more equity than debt, which provides a steadier and more reliable financial foundation.

A Debt-To-Equity Method Provides a Quick Idea of One's Financial