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143) The debt ratio of Company A is 0.31 and the debt ratio of Company B is 0.21. Based on this information, an investor can conclude: A) Company B has more debt than Company A. B) Company B has less financial leverage. C) Company A has less financial leverage. D) Company A has 10% more assets than Company B. E) Both companies have too much debt. Answer: B Difficulty: 2 Medium Topic: Debt Ratio Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Bloom's: Understand AACSB/Accessibility: Analytical Thinking / Keyboard Navigation AICPA: BB Industry; FN Risk Analysis 144) The debt ratio of Braun is 0.9 and the debt ratio of Kemp is 1.0. Based on this information, an investor can conclude: A) Kemp finances a relatively lower portion of its assets with liabilities than Braun. B) Kemp has less financial leverage. C) Braun has higher financial leverage. D) Kemp has the exact same dollar amount of total liabilities and total assets. E) Braun has less equity per dollar of assets than Kemp. Answer: D Difficulty: 2 Medium Topic: Debt Ratio Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Bloom's: Understand AACSB/Accessibility: Analytical Thinking / Keyboard Navigation AICPA: BB Industry; FN Risk Analysis

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Test Bank for Fundamental Accounting Principles 24th Edition Wild  

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