An increase in the ratio of stockholders' equity to liabilities indicates an improvement in the margin of safety for creditors.

Name: An increase in the ratio of stockholders' equity to liabilities indicates an improvement in the margin of safety for creditors.
Brand: Quizplus
Rating: 4.9 (40 reviews)

Question

Quizplus · Accepted Answer

This is because a higher ratio of stockholders' equity to liabilities means that there is a greater amount of assets available to cover any potential losses or debts, providing a stronger financial cushion for creditors.

An Increase in the Ratio of Stockholders' Equity to Liabilities