Indicate whether each of the following statements about financial statement analysis is true or false.Solvency ratios measure a company's short-term debt paying ability and its financial structure.A company with a high debt to assets ratio probably would be considered to have a high level of financial risk.The debt to equity ratio and debt to assets ratio are two ways to measure the same relationship.From the point of view of stockholders, a decline in the debt to equity ratio is always good news.The lower the debt to equity ratio, the higher a company's financial leverage.
What will be an ideal response?
Solvency ratios measure a company's short-term debt paying ability and its financial structure. F
A company with a high debt to assets ratio probably would be considered to have a high level of financial risk. T
The debt to equity ratio and debt to assets ratio are two ways to measure the same relationship. T
From the point of view of stockholders, a decline in the debt to equity ratio is always good news. F
The lower the debt to equity ratio, the higher a company's financial leverage. F
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