Ratios: When would you be willing to lend

When would you be willing to lend to a firm with a high debt ratio but a high times interest earned ratio?

Question options:

  • When they have a low quick ratio
  • When the book value is negative
  • When they have a very high inventory turnover
  • When the firm uses relatively few assets to produce its product — like a consultant. (x)

answer: When the firm uses relatively few assets to produce its product — like a consultant.

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