question 14\nwhich of the following does a high debt to owner’s equity ratio signal?\nthe company assumes…

question 14\nwhich 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.

question 14\nwhich 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 compared to equity. A high ratio means a larger portion of financing is from debt, indicating heavy debt reliance. Also, taking on more debt increases financial risk. 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 as other factors like cash flow also matter.

Answer:

The company assumes too much risk. The company relies heavily on debt.