Question

Select the correct answer.

What should be the ideal debt-equity ratio of an organization?
OA.
B.
O C.
O D.
debt equity ratio should ideally be 1 to 2
the higher the debt-equity ratio, the better it is for the organization
there is no ideal debt-equity ratio as it varies as per the industry
an organization should ideally be debt free

Answer 1

Explanation:

C. There is no ideal debt-equity ratio as it varies as per the industry.

The ideal debt-equity ratio for an organization depends on various factors, including the industry in which the organization operates, its financial goals, risk tolerance, and market conditions. Different industries have different standards and norms for debt-equity ratios.

While some industries may prefer higher leverage and have higher debt-equity ratios, others may opt for lower debt levels or even aim to be debt-free. It is important for organizations to carefully assess their specific circumstances and make decisions regarding their debt-equity ratio based on their financial objectives and risk management strategies.