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<p style="text-align:justify;"><strong><span>(a) High debt proportion,</span></strong></p> <p style="text-align:justify;"><strong><span>(b) Lower debt proportion,</span></strong></p> <p style="text-align:justify;"><strong><span>(c) Equal debt and equity,</span></strong></p> <p style="text-align:justify;"><strong><span>(d) No debt</span></strong></p>
The relationship between total liabilities & total equity is called the debt to equity ratio.Itshows the proportion of total liabilities relative to the proportion of totalequity that is financing the company’s assets. Thus, this ratio measures financialleverage.
If the debt to equity ratio is greater than1, then the company is financingmore assets with debt than with equity.
If the ratio is less than1, then the companyis financing more assets with equity than with debt.
The higher the debt to equityratio, the higher the company’s financial risk
So, choice A, high debt proportion is the answer
A) high availing of finance, which is not useful if you have no other backbone of business or other range of businesses.
number a - high debt proportion
(a) .
