All of the following statements accurately describe the debt ratio except.
A. The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.
B. A relatively high ratio is always desirable.
C. Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.
D. The dividing line for a high and low ratio varies from industry to industry.
E. It is of use to both internal and external users of accounting information.
Answer: B
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