What do most companies believe with respect to debt management ratios?

Question

Quizplus · Accepted Answer

Most companies strive for an appropriate balance between debt and equity financing to ensure financial stability and to avoid excessive debt burden. Option A is incorrect because a current ratio of 0.75 indicates that the company has more short-term liabilities than short-term assets, which is often considered risky. Option B is incorrect because keeping a small amount of cash available can increase the risk of defaulting on loans and is therefore not a sound debt management strategy. Option C is also incorrect because debt management ratios are important regardless of cash flows as they provide insight into a company's financial health and risk exposure.

What Do Most Companies Believe with Respect to Debt Management