Multiple choice

Banks generally prefer debt equity ratio at

  1. 1 : 1

  2. 1 : 3

  3. 2 : 1

  4. 3 : 1
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Debt/equity ratio is a debt ratio used to measure a company's financial leverage. It is calculated by dividing a company's total liabilities by its stockholders' equity. Therefore, it is considered good when it is 2 : 1.

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