Question

Generally, a high ___________ ratio could lead investors and creditors to view the company as being very risky debt to owners' equity acid-test inventory turnover diluted earnings per share

Answer 1

High debt to owner's equity ratio.

This is total liabilities divided by total assets and shows a company's financial leverage, also known as their ability to handle current and future financial obligations.

Answer 2

Debt to owners' equity ratio

Step-by-step explanation:

Debt to owners' equity ratio shows if the shareholder equity can cover the debts the company has and it is calculated by dividing the company's liabilities by the shareholder equity.

Acid-test ratio shows if a business current assets can cover the short-term liabilities.

Inventory turnover ratio shows how well the company generates sales from its inventories and it is calculated by dividing the cost of the products sold by the average inventory.

Diluted earnings per share is a measure that shows what can happen if securities that are not common stock but that can be turn into that are exercised by the owner.

According to this, a high debt to owners' equity ratio could lead investors and creditors to view the company as being very risky because the equity is not enough to cover the debt the company has if something goes wrong.