A low debt ratio is safer than a high debt ratio.

Question

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A low debt ratio indicates that a company has less debt compared to its assets or equity, which means it has less financial risk and is less likely to default on its debt obligations. In contrast, a high debt ratio implies that a company has a greater degree of leverage, making it more vulnerable to economic downturns and interest rate fluctuations. Consequently, a low debt ratio is considered safer and more desirable than a high debt ratio.

A Low Debt Ratio Is Safer Than a High Debt