The correct answer is A. Lower the protection to creditors.
A lower debt-to-equity ratio means that a company has more equity and less debt. This means that the company has more assets that are not borrowed, and therefore, creditors have less of a claim on the company’s assets in the event of bankruptcy.
A higher debt-to-equity ratio means that a company has more debt and less equity. This means that the company has more assets that are borrowed, and therefore, creditors have a greater claim on the company’s assets in the event of bankruptcy.
Option B is incorrect because a lower debt-to-equity ratio does not mean that creditors have more protection. In fact, it means that they have less protection.
Option C is incorrect because a lower debt-to-equity ratio does affect creditors. It means that they have less of a claim on the company’s assets in the event of bankruptcy.
Option D is incorrect because the answer is A.