A company with a high debt to equity ratio is in a more vulnerable position during poor economic times than a company with a low debt to equity ratio.

Question

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A company with a high debt to equity ratio has more debt compared to equity, which means that it is relying heavily on borrowing to finance its operations. During poor economic times, the company's profits may decline, making it difficult to meet debt obligations. This can increase the risk of default or bankruptcy, which can, in turn, affect the company's ability to access credit in the future. On the other hand, a company with a low debt to equity ratio has a stronger financial position and may be better able to weather economic downturns.

A Company with a High Debt to Equity Ratio Is