Which of the following statements is not true?
A) If the equity ratio is less than 50% then the entity is more reliant on debt funding than equity funding.
B) The sum of the debt ratio and the equity ratio does not have to equal 100%.
C) The debt ratio indicates how many dollars of debt exist per dollar of assets.
D) If the debt to equity ratio is more than 100%, the entity is more reliant on debt funding than equity funding.

Question

Quizplus · Accepted Answer

The sum of the debt ratio and the equity ratio typically equals 100% because these ratios together represent the total financing of the company through debt and equity relative to its total assets.

Which of the Following Statements Is Not True