If the ratio of total stockholders' equity to total assets was greater in 2017 than in 2016,then
A) total assets increased by a greater amount than did total stockholders' equity.
B) the ratio of total liabilities to total assets was smaller in 2017 than in 2016.
C) creditors would consider it riskier to lend to this company in 2017 than in 2016.
D) the ratio of total liabilities to total assets was larger in 2017 than in 2016.

Question

Quizplus · Accepted Answer

If the ratio of total stockholders' equity to total assets increased, it implies that the proportion of assets financed by equity increased, meaning the proportion financed by liabilities decreased, thus the ratio of total liabilities to total assets was smaller in 2017 than in 2016.

If the Ratio of Total Stockholders' Equity to Total Assets