Selected data from the financial statements are provided below:

-Refer to Rent-a-Center. Which of the following is true regarding the debt management ratios between 2019 and 2020?
A)The debt-to-equity and debt-to-total assets ratios both increased.
B)The debt-to-equity and total debt-to-total assets ratios both decreased.
C)The debt-to-equity and long-term debt-to-equity ratios both decreased.
D)The debt-to-equity ratio decreased and the debt-to-total assets ratios increased.

Question

Selected data from the financial statements are provided below:
 
-Refer to Rent-a-Center. Which of the following is true regarding the debt management ratios between 2019 and 2020?
A)The debt-to-equity and debt-to-total assets ratios both increased. 
B)The debt-to-equity and total debt-to-total assets ratios both decreased. 
C)The debt-to-equity and long-term debt-to-equity ratios both decreased. 
D)The debt-to-equity ratio decreased and the debt-to-total assets ratios increased.

Quizplus · Accepted Answer

The debt-to-equity and debt-to-total assets ratios both increasing indicates that the company has taken on more debt relative to its equity and assets, respectively, which can happen due to new borrowings or a decrease in equity or assets.

Selected Data from the Financial Statements Are Provided Below