Q22
Lower the Debt Equity ratio
A.
Lower the protection to creditors
B.
Higher the protection to creditors
AnswerC.
It does not affect the creditors
D.
None of the above
Answer: Option B
Solution
Answer: Option B
Solution:
Lower the Debt Equity ratio higher is the protection to creditors. Creditors usually like a low debt to equity ratio because a low ratio (less than 1) is the indication of greater protection to their money.