Home »
MCQs »
Commerce MCQs »
Basic Accounting MCQs
Which Ratio protects the Creditors?
17. Which Ratio protects the Creditors?
- Lower Debt Equity Ratio
- Liquidity Assets
- Higher Inventory Ratio
- Return on Investment Ratio
Answer: A) Lower Debt Equity Ratio
Explanation:
Lower the Debt Equity ratio higher is the protection to creditors. Creditors usually like a low debt to equity ratio because a low ratio (less than 1) is the indication of greater protection to their money.