I5

When interpreting this ratio, a lower ratio indicates greater solvency and a higher ratio indicated increased business risk.

A)the acid test

B)debt to equity ratio

C)the quick ratio

D)return on equity

When the financial management needs of a business are to reinvest for maintenance or to build owner wealth, the business needs

A)financing for operations.

B)financing for growth.

C)financing for start-ups.

D)financing for exit.

Which of the following is true of the debt-to-equity ratio?

A)it measures the relative risk that a business setback could cause bankruptcy

B)it is calculated using the formula: Total Liabilities/Total Assets

C)if the ratio is lower, it indicates lesser solvency

D)if the ratio is greater, it indicates increased business risk