{"id":44384,"date":"2024-04-15T21:43:00","date_gmt":"2024-04-15T21:43:00","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=44384"},"modified":"2024-04-15T21:43:00","modified_gmt":"2024-04-15T21:43:00","slug":"the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/","title":{"rendered":"The Debt Equity ratio of a company for three consecutive years was as follows: Year Debt Equity Ratio 1989 $$\\frac{{399}}{{28}}$$ 1990 $$\\frac{{493}}{{34}}$$ 1991 $$\\frac{{624}}{{42}}$$ The aforesaid ratios show:"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;That the company&#8217;s financial structure is sound&#8221; option2=&#8221;That the company is capable of meeting its shrot-term liabilities&#8221; option3=&#8221;That the interests of creditors are not safe in the company&#8221; option4=&#8221;That the long-term liquidity of the company is improving from year to year&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is: <strong>C. That the interests of creditors are not safe in the company<\/strong>.<\/p>\n<p>The debt-equity ratio is a measure of a company&#8217;s financial leverage. It is calculated by dividing the company&#8217;s total debt by its total equity. A high debt-equity ratio indicates that a company is using a lot of debt to finance its operations. This can be risky for creditors, as it means that the company is more likely to default on its loans.<\/p>\n<p>In the case of the company in the question, the debt-equity ratio has been increasing from year to year. This suggests that the company is using more and more debt to finance its operations. This is a worrying trend for creditors, as it means that the company is becoming more risky.<\/p>\n<p>It is important to note that the debt-equity ratio is just one measure of a company&#8217;s financial health. Other factors, such as the company&#8217;s cash flow and profitability, should also be considered when assessing a company&#8217;s risk.<\/p>\n<p>Here is a brief explanation of each option:<\/p>\n<ul>\n<li>Option A: That the company&#8217;s financial structure is sound. This is not necessarily the case. A high debt-equity ratio can indicate that a company is using too much debt, which can be risky.<\/li>\n<li>Option B: That the company is capable of meeting its short-term liabilities. This is also not necessarily the case. A high debt-equity ratio can indicate that a company is using too much debt, which can make it difficult to meet its short-term liabilities.<\/li>\n<li>Option C: That the interests of creditors are not safe in the company. This is the most likely explanation for the increasing debt-equity ratio. A high debt-equity ratio indicates that a company is using a lot of debt to finance its operations, which can be risky for creditors.<\/li>\n<li>Option D: That the long-term liquidity of the company is improving from year to year. This is not necessarily the case. A high debt-equity ratio can indicate that a company is using too much debt, which can make it difficult to meet its long-term liabilities.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;That the company&#8217;s financial structure is sound&#8221; option2=&#8221;That the company is capable of meeting its shrot-term liabilities&#8221; option3=&#8221;That the interests of creditors are not safe in the company&#8221; option4=&#8221;That the long-term liquidity of the company is improving from year to year&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-44384","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Debt Equity ratio of a company for three consecutive years was as follows: Year Debt Equity Ratio 1989 $$\\frac{{399}}{{28}}$$ 1990 $$\\frac{{493}}{{34}}$$ 1991 $$\\frac{{624}}{{42}}$$ The aforesaid ratios show:<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Debt Equity ratio of a company for three consecutive years was as follows: Year Debt Equity Ratio 1989 $$\\frac{{399}}{{28}}$$ 1990 $$\\frac{{493}}{{34}}$$ 1991 $$\\frac{{624}}{{42}}$$ The aforesaid ratios show:\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;That the company&#8217;s financial structure is sound&#8221; option2=&#8221;That the company is capable of meeting its shrot-term liabilities&#8221; option3=&#8221;That the interests of creditors are not safe in the company&#8221; option4=&#8221;That the long-term liquidity of the company is improving from year to year&#8221; correct=&#8221;option3&#8243;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-15T21:43:00+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"The Debt Equity ratio of a company for three consecutive years was as follows: Year Debt Equity Ratio 1989 $$\\frac{{399}}{{28}}$$ 1990 $$\\frac{{493}}{{34}}$$ 1991 $$\\frac{{624}}{{42}}$$ The aforesaid ratios show:","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/","og_locale":"en_US","og_type":"article","og_title":"The Debt Equity ratio of a company for three consecutive years was as follows: Year Debt Equity Ratio 1989 $$\\frac{{399}}{{28}}$$ 1990 $$\\frac{{493}}{{34}}$$ 1991 $$\\frac{{624}}{{42}}$$ The aforesaid ratios show:","og_description":"[amp_mcq option1=&#8221;That the company&#8217;s financial structure is sound&#8221; option2=&#8221;That the company is capable of meeting its shrot-term liabilities&#8221; option3=&#8221;That the interests of creditors are not safe in the company&#8221; option4=&#8221;That the long-term liquidity of the company is improving from year to year&#8221; correct=&#8221;option3&#8243;]","og_url":"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2024-04-15T21:43:00+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/","url":"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/","name":"The Debt Equity ratio of a company for three consecutive years was as follows: Year Debt Equity Ratio 1989 $$\\frac{{399}}{{28}}$$ 1990 $$\\frac{{493}}{{34}}$$ 1991 $$\\frac{{624}}{{42}}$$ The aforesaid ratios show:","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2024-04-15T21:43:00+00:00","dateModified":"2024-04-15T21:43:00+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/the-debt-equity-ratio-of-a-company-for-three-consecutive-years-was-as-follows-year-debt-equity-ratio-1989-frac39928-1990-frac49334-1991-frac62442-the-aforesa\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"mcq","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/mcq\/"},{"@type":"ListItem","position":3,"name":"accounting","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/mcq\/accounting\/"},{"@type":"ListItem","position":4,"name":"The Debt Equity ratio of a company for three consecutive years was as follows: Year Debt Equity Ratio 1989 $$\\frac{{399}}{{28}}$$ 1990 $$\\frac{{493}}{{34}}$$ 1991 $$\\frac{{624}}{{42}}$$ The aforesaid ratios show:"}]},{"@type":"WebSite","@id":"https:\/\/exam.pscnotes.com\/mcq\/#website","url":"https:\/\/exam.pscnotes.com\/mcq\/","name":"MCQ and Quiz for Exams","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/exam.pscnotes.com\/mcq\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209","name":"rawan239","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","caption":"rawan239"},"sameAs":["https:\/\/exam.pscnotes.com"],"url":"https:\/\/exam.pscnotes.com\/mcq\/author\/rawan239\/"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/44384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/comments?post=44384"}],"version-history":[{"count":0,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/44384\/revisions"}],"wp:attachment":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/media?parent=44384"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/categories?post=44384"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/tags?post=44384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}