Answer-A high Debt-Equity Ratio indicates:

The Debt-Equity Ratio Total Debt Total Equity measures a companys financial leverage. A high ratio indicates that the company is aggressively funding its growth with debt, which can be risky because debt must be repaid with interest regardless of business performance, increasing financial risk contrary to A.

Question

A high Debt-Equity Ratio

indicates:

A Low financial risk

B High operational efficiency

C High reliance on external debt

D Strong liquidity position

E Low cost of capital

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A high Debt-Equity Ratio

Solution