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The debt ratio considers the proportion of all stockholders' equity that is financed with debt.

True
False

User Cmdematos
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1 Answer

4 votes

Final answer:

The statement in question is false. The debt ratio measures the percentage of a company's assets that are financed through debt, not the proportion of stockholders' equity financed with debt.

Step-by-step explanation:

The statement "The debt ratio considers the proportion of all stockholders' equity that is financed with debt" is false. The debt ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is calculated by dividing the total liabilities by the company's total assets, not by stockholders' equity. Stockholders' equity represents the equity of a company's shareholders and is not directly used to measure the proportion of assets financed with debt.

User SinisterMJ
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