If the ratio of total stockholders' equity to total assets was greater in 2013 than in 2012, then
A) total assets increased by a greater amount than did total stockholders' equity.
B) the ratio of total liabilities to total assets was smaller in 2013 than in 2012.
C) creditors would consider it riskier to lend to this company in 2013 than in 2012.
D) the ratio of total liabilities to total assets was larger in 2013 than in 2012.

Question

Quizplus · Accepted Answer

If the ratio of total stockholders' equity to total assets increased, it implies that the proportion of equity financing increased relative to liabilities, meaning the ratio of total liabilities to total assets decreased.

If the Ratio of Total Stockholders' Equity to Total Assets