Asked by Landon Womack on May 26, 2024

verifed

Verified

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

Margin of Safety

The difference between actual or projected sales and the break-even point; measures the risk of not covering fixed costs.

Liabilities to Stockholders' Equity

A ratio that measures the amount of liabilities a company has compared to its shareholders' equity.

  • Identify the importance of considering financing sources in analyzing financial health and performance.
verifed

Verified Answer

ZK
Zybrea KnightJun 02, 2024
Final Answer :
True
Explanation :
A decrease in the ratio of liabilities to stockholders' equity means that a company has less debt in comparison to its equity, indicating a stronger financial position and more security for creditors.