Identify the true statement below:

Select one:

A. Use of debt in a companys capital structure is very risky and should always be avoided in favor of using equity.

B. If I know my companys debt ratio, I can calculate/determine the relative proportion of total equity that is in my companys capital structure.

C. A steadily rising Days Sales in Inventory (DSI) that exceeds industry averages is generally considered to be a favorable trend.

D. If Days Sales in Receivables (DSR) is materially longer than my companys credit terms to its customers, this may indicate a collection problem.

E. Both B. and D. are true statements.

My companys debt ratio (Total liabilities/Total assets) is 45.0%. Knowing this, what would my companys Financial Leverage Ratio (FLR) be?

Select one:

A. Cannot be determined from the information given

B. 55.0 %

C. Approximately 1.8

D. Approximately 2.2

E. Approximately 1.2