Which of the following criteria would be determinants of the appropriate ratio of debt to equity if a company should not take on more debt than can be serviced under conservative economic forecasts?
i.Maximisation of shareholder wealth
ii.Industry norms
iii.History of the ratio for the firm
iv.The stage of the current economic cycle
v.Limit imposed by lenders
vi.The company's capacity to service debt

Question

Quizplus · Accepted Answer

Industry norms, history of the ratio for the firm, limit imposed by lenders, and the company's capacity to service debt are relevant criteria for determining the appropriate debt-to-equity ratio under conservative economic forecasts.

Which of the Following Criteria Would Be Determinants of the Appropriate