An investor views a high debt-to-equity ratio and a low times interest earned ratio as favorable signs of a company's abilities to meet its long-term obligations.

Question

Quizplus · Accepted Answer

A high debt-to-equity ratio indicates that a company has more debt than equity, which means that the company may struggle to pay off its debts in the long run. Similarly, a low times interest earned ratio indicates that a company may have difficulty making interest payments on its debts. Therefore, these are not favorable signs for a company's ability to meet its long-term obligations.

An Investor Views a High Debt-To-Equity Ratio and a Low