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Basic Question 5 of 6
True or False? The lower the debt to equity ratio, the riskier the situation.
User Contributed Comments 4
| User | Comment |
|---|---|
| johntan1979 | Is this implying that non-public companies are "high risk" investments, since they are 100% debt-financed? |
| Seancfa1 | You can have equity in a privately held firm. |
| ldfrench | Take a look at Lehman Brothers and Bear Stearns D/E in 2007-2008 |
| houstcarr | non-public companies definitely are not 100% debt financed |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
calculate and interpret activity, liquidity, solvency, and profitability ratios
describe relationships among ratios and evaluate a company using ratio analysis
CFA® 2025 Level I Curriculum, Volume 3, Module 11.