The correct answer is D. Lower Debt-Equity Ratio means lower Financial Risk.
A higher receivable turnover is desirable because it means that a company is collecting its receivables more quickly. This can lead to improved cash flow and a lower risk of bad debts.
The interest coverage ratio is a measure of a company’s ability to pay its interest expenses. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expense. A higher interest coverage ratio indicates that a company is better able to pay its interest expenses, which means that it is less risky.
The net profit ratio is a measure of a company’s profitability. It is calculated by dividing net income by sales. A higher net profit ratio indicates that a company is more profitable. However, an increase in net profit ratio does not necessarily mean that sales have increased. It is possible for a company to increase its net profit ratio by reducing its expenses, even if its sales remain the same.
The debt-equity ratio is a measure of a company’s financial leverage. It is calculated by dividing total debt by total equity. A higher debt-equity ratio indicates that a company is more leveraged, which means that it is using more debt to finance its
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