Bathlinks Corporation has a debt to assets ratio of 73%.This tells the user of Bathlinks's financial statements that
A)Bathlinks is getting a 27% return on its assets.
B)there is a risk that Bathlinks cannot pay its debts as they come due.
C)73% of the assets are financed by the stockholders.
D)based on this measure, the user should not invest in Bathlinks.

Question

Quizplus · Accepted Answer

A high debt to assets ratio of 73% indicates that a significant portion of the company's assets are financed through debt, which can imply a higher risk of financial distress or difficulty in meeting debt obligations.

Bathlinks Corporation Has a Debt to Assets Ratio of 73