What the means that the jones ltd

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Problem 1: Jones Ltd has a debt-to-equity ratio of 25% compared with the industry average of 20%. This means that the Jones Ltd......

A. has less liquidity than other businesses.

B. has greater than average financial risk when compared to other businesses.

C. will not experience any difficulty with its creditors when compared to other businesses.

D. will be viewed as having high creditworthiness when compared to other businesses.

Problem 2: Which one of the following statements is most likely to be correct?

A. The acquisition of land and building through a mortgage will improve the debt-equity ratio.

B. An improvement of profit margin will improve the debt-equity ratio.

C. A capitalisation issue of shares using retained earnings will improve the debt-equity ratio.

D. A lower debt-equity ratio lowers the protection of creditors.

Reference no: EM133004630

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