Asked by Landon Womack on May 26, 2024
Verified
A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.
Margin of Safety
The difference between actual or projected sales and the break-even point; measures the risk of not covering fixed costs.
Liabilities to Stockholders' Equity
A ratio that measures the amount of liabilities a company has compared to its shareholders' equity.
- Identify the importance of considering financing sources in analyzing financial health and performance.
Verified Answer
ZK
Zybrea KnightJun 02, 2024
Final Answer :
True
Explanation :
A decrease in the ratio of liabilities to stockholders' equity means that a company has less debt in comparison to its equity, indicating a stronger financial position and more security for creditors.
Learning Objectives
- Identify the importance of considering financing sources in analyzing financial health and performance.
Related questions
If an Entrepreneur Issues Convertible Debt,he or She Will Lose ...
Percentage Analyses, Ratios, Turnovers, and Other Measures of Financial Position ...
What Do the Economics of Health Care Include ...
The Ratio of the Sum of Cash, Receivables, and Marketable ...
If the Accounts Receivable Turnover for the Current Year Has ...