Question

Which of the following firms tend to have high debt ratios? A. Startup firms B. near-bankrupt...

Which of the following firms tend to have high debt ratios?

A. Startup firms

B. near-bankrupt firms

C. AA-rated firms

D. financial service firms

- C&D

-A&B

-C

-A,B,and D

-A,B,C,D

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Homework Answers

Answer #1

As per details given inn the question-
Correct Answer is option D-
Firms tends to have high debt ratio -

  1. Startup Firms- They have more liability as compared to Assets, because they are just build up and make the names in the market.
  2. Near bankrupt firm - Firms are near end to bankcrupt have more liability than the assets
  3. Financial services firms- These use more debt
  4. AA rated firms are having high Total assets as compared to liabilty

Debt ratio = Total Liabilities / Total Assets

I hope this clear your doubt.

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