Paint Company Following are selected data from Paint Company's financial statements.
Refer to the Paint Company data.
Paint's debt-to-equity ratio for 2012 is:
A)an indicator that Paint Company's ability to meet current interest payments to creditors is increasing
B)increasing slightly from 2011 to 2012.
C)an indicator that for every $1 of capital that stockholders provided,creditors provided $0.83.
D)an indicator that Paint Company has relied on stockholders for funds more in 2011 than in 2012.

Question

Paint Company Following are selected data from Paint Company's financial statements.
 Refer to the Paint Company data.
Paint's debt-to-equity ratio for 2012 is:
A)an indicator that Paint Company's ability to meet current interest payments to creditors is increasing 
B)increasing slightly from 2011 to 2012. 
C)an indicator that for every $1 of capital that stockholders provided,creditors provided $0.83. 
D)an indicator that Paint Company has relied on stockholders for funds more in 2011 than in 2012.

Quizplus · Accepted Answer

The debt-to-equity ratio indicates the proportion of debt and equity financing used by the company. A debt-to-equity ratio of 0.83 means that creditors provided $0.83 of debt for every $1 of equity provided by stockholders. It does not provide information on the ability to meet current interest payments or a comparison between 2011 and 2012.

Paint Company Following Are Selected Data from Paint Company's Financial