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28 October, 01:43

The debt-to-equity ratio:A. Is calculated by dividing book value of secured liabilities by book value of pledged assets. B. Is a means of assessing the risk of a company's financing structure. C. Is not relevant to secured creditors. D. Can always be calculated from information provided in a company's income statement. E. Must be calculated from the market values of assets and liabilities.

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  1. 28 October, 02:12
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    The debt-to-equity ratio is a means of assessing the risk of a company's financing structure.

    The correct answer is B

    Explanation:

    The division of book value of secured liabilities by book value of pledged assets is referred to as debt ratio.

    Debt-equity ratio is calculated by dividing the book value of debt by book value of total stockholders equity. It measures the extent to which a firm is exposed to financial risk.

    Debt-to-equity ratio is relevant to secured creditors because it shows the ability of a firm in repaying its debt obligations.

    Debt-to-equity ratio cannot be calculated from the information provided in a company's income statement.

    Debt-to-equity ratio is not calculated from the market values of assets and liabilities.
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