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Which of the following does not accurately discuss the debt to equity ratio? A. Communicates how...

Which of the following does not accurately discuss the debt to equity ratio?

A. Communicates how assets are financed

B. Communicates to potential lender how much in assets are available which are not already claimed by other creditors

C. Total liabilities/stockholder’s equity

D. Communicates company’s ability to pay interest on borrowed funds

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Answer #1

Option D is the answer

It is Times interest earned ratio the one that measures the ability of company to pay interest on its debts. It is calculated by dividing interest expense upon income before interest And taxes

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