Answer (B) is correct . Since debt plus equity equals assets, a debt to equity ratio would have a lower denominator than a debt to assets ratio. Thus, the debt to equity ratio would be higher than the debt to assets ratio.
Answer (A) is incorrect because The ratios would always be different unless either debt or equity equaled zero.
Answer (C) is incorrect because The lower denominator in the debt to equity ratio means that it would always be higher than the debt to assets ratio.
Answer (D) is incorrect because The two ratios are related in that they always move in the same direction.
|
