which of the following does a high debt to owner’s equity ratio signal?\nthe company assumes too much…

which of the following does a high debt to owner’s equity ratio signal?\nthe company assumes too much risk.\nthe company relies heavily on debt.\nthe company is able to pay off current debts.\nthe company is not creditworthy.

which of the following does a high debt to owner’s equity ratio signal?\nthe company assumes too much risk.\nthe company relies heavily on debt.\nthe company is able to pay off current debts.\nthe company is not creditworthy.

Answer

Brief Explanations:

The debt - to - owner's equity ratio measures the proportion of a company's financing that comes from debt versus equity. A high ratio means debt is a large part of the company's capital structure, indicating heavy reliance on debt. While it may imply risk, heavy debt - reliance is the most direct signal. Ability to pay off current debts is related to liquidity ratios, and a high debt - to - equity ratio doesn't directly mean a company is not creditworthy.

Answer:

The company relies heavily on debt.