As a bank loan officer,you are considering a loan application by Peak Performance Sporting Goods.The company has provided you with the following information: Peak Performance's debt to owners equity ratio (rounded to the nearest tenth of a percent)is:

Question

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A debt to owners equity ratio of 45.4% would be considered relatively low, meaning that the company is relying more on equity (money invested by owners) than debt (money borrowed from lenders). This may be favorable for the company's financial stability, but it also means that they may not need or qualify for a large loan.

A ratio of 112.5% or 133.3% would mean that the company has a higher level of debt than equity, which puts them in a riskier position from a lender's perspective. They may struggle to make payments on existing debt or may have trouble obtaining additional loans.

A ratio of 66.7% puts the company in the middle range, where they have a moderate amount of debt relative to their equity. This may be a viable ratio for obtaining a loan, but other factors such as the company's cash flow, credit history, and ability to repay the loan will also need to be considered.

As a Bank Loan Officer,you Are Considering a Loan Application