The Kosov School teaches adults how to communicate in a foreign language in a period of weeks. The school's debt-to-equity ratio is 120 percent. Which of the following interpretations is represented by the ratio?
A) The school has surplus retained earnings.
B) The school is very liquid.
C) The school has more debt than equity.
D) The school has high accrued expenses.

Question

Quizplus · Accepted Answer

A debt-to-equity ratio of 120 percent indicates that the school has more debt than equity. This may suggest that the school is financing its operations primarily through debt, which could potentially lead to financial instability if the school is unable to make its debt payments in the future. It does not provide information about surplus retained earnings, liquidity, or accrued expenses.

The Kosov School Teaches Adults How to Communicate in a Foreign