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Lower the Debt Equity ratio

This question belongs to Commerce Accounting
Accounting
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Lower the Debt Equity ratio

Answer & Solution
Correct Answer: Option B
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.
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3 Comments
CA Meenakshi
CA Meenakshi 7 years ago
It's answer must b "it doesn't affect creditors" because creditors represent short term liability not d long term and debt equity ratios represent long term solvency of d firm.
Ali Arslan
Ali Arslan 7 years ago
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Sugandha Kumari
Sugandha Kumari 8 years ago
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