ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Better off financially the person is
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Worse off financially the person is
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More cash the person has
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Less cash the person has
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Detailed explanation-1: -Since the debt ratio is calculated by dividing liabilities by net worth, the lower the debt ratio the better; that is the better off the person is financially.
Detailed explanation-2: -A low debt ratio means that a company has a small amount of debt compared to its equity. This indicates that the company is healthy and has a strong balance sheet. A low debt ratio also means that the company has more equity, which gives it more money to invest in its business.
Detailed explanation-3: -Your net worth is the amount by which your assets exceed your liabilities. In simple terms, net worth is the difference between what you own and what you owe. If your assets exceed your liabilities, you have a positive net worth.
Detailed explanation-4: -A low asset-to-debt ratio is a positive indicator of financial well-being. The debt service-to-income ratio provides a view of total debt burden of an individual or family by comparing the dollars spent on gross annual debt repayments with gross annual income.