Which of the following is considered a good/safe rule-of-thumb debt ratio for businesses?
A) 1.5 or above
B) .6 or below
C) 1.0 or above
D) .8 or below

Question

Quizplus · Accepted Answer

A debt ratio of .6 or below is considered a good/safe rule-of-thumb for businesses as it indicates that the company has more assets than liabilities and is less leveraged. A higher debt ratio increases the risk of default and financial distress.

Which of the Following Is Considered a Good/safe Rule-Of-Thumb Debt