85.8k views
3 votes
A debt to owners' equity ratio of over 100 percent would mean

Multiple Choice
the company is in too much debt, and should restructure.
the company has more equity than debt
the company has more debt than equity.
by comparison with other firms, the company is probably in good shape.

User Kerlene
by
8.0k points

1 Answer

5 votes

Answer:

A debt to owners' equity ratio of over 100 percent would mean that:

the company has more debt than equity.

Option C is the correct answer. A debt to owners' equity ratio of over 100% indicates that the company has more debt than equity. This means that the company is relying more on borrowing to finance its operations rather than relying on its own equity. A high debt to equity ratio could indicate that the company is taking on too much debt, which could increase its financial risk and make it more difficult to obtain further financing. It is generally considered unfavorable for a company to have a high debt to equity ratio, as it could make the company more vulnerable to economic downturns or other financial stress.

User Jean S
by
7.5k points