BUSINESS ADMINISTRATION
ENTREPRENEURIAL DEVELOPMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Declining.
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Increasing.
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Stable.
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Fluctuating.
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Detailed explanation-1: -Solution. A commercial banker considers a declining debt-to-equity ratio because it indicates an organization’s financial viability.
Detailed explanation-2: -The optimal debt-to-equity ratio will tend to vary widely by industry, but the general consensus is that it should not be above a level of 2.0.
Detailed explanation-3: -A low debt-to-equity ratio means the equity of the company’s shareholders is bigger, and it does not require any money to finance its business and operations for growth. In simple words, a company having more owned capital than borrowed capital generally has a low debt-to-equity ratio.
Detailed explanation-4: -The debt-to-equity ratio (D/E ratio) shows how much debt a company has compared to its assets. It is found by dividing a company’s total debt by total shareholder equity. A higher D/E ratio means the company may have a harder time covering its liabilities.
Detailed explanation-5: -Debt equity ratio is a measure of long term solvency.