In assessing the debt ratios, analysts customarily vary the standard in relation to the stability of the firm's earnings and cash flows from operations.Banks have liabilities to assets ratios, typically
A)over 10%.
B)over 30%.
C)over 50%.
D)over 70%.
E)over 90%.

Question

Quizplus · Accepted Answer

Banks typically have liabilities to assets ratios over 90% because they operate with high leverage, using deposits and other borrowed funds to finance their lending and investment activities.

In Assessing the Debt Ratios, Analysts Customarily Vary the Standard