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

Question

Quizplus · Accepted Answer

A high debt ratio means a company has a significant amount of debt compared to its assets or equity. This indicates that the company may have trouble paying off its debts and interest payments, especially during periods of economic downturns. Therefore, a high debt ratio increases the risk of default and indicates a higher risk of a company not being able to meet its obligations.

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