In considering equity and debt financing, which of the following statements is false?

a.A debt to equity ratio of .45 represents: for every $1 of equity, $0.45 is funded by debt

b.Many firms use both debt and equity financing

c.In general, a higher proportion of total debt to equity ratio indicates the firm is utilizing more leverage to fund its activities

d. Both interest and dividend payments are required to be made by the issuing corporation

e.Debt to assets ratio represents: for every $1 of assets, the portion of assets funded by debt

Tor F The changes in Accounting Standards for leases will require more leases be capitalized and reflected on the balance sheet. The impact of this change is anticipated to increase the debt/equity ratio.(if false, identify error)

Muncie Manufacturing

Beverage Production

2019

2018

2017

2019

2018

2017

Interest Cash Coverage

7.3

6.5

6.0

9.0

8.5

8.0

Interest Coverage (TIE) Ratio

6.5

5.8

4.1

8.5

7.9

7.4

Debt/Assets Ratio

0.6

0.5

0.4

0.5

0.4

0.3

Debt/Equity Ratio

1.3

1.1

1.0

0.8

0.7

0.4

Which statement best describes Muncie's performance regarding its ability to cover interest expense?

a.It is deteriorating over time and the company is underperforming as compared to its industry

b.It is improving over time and the company is underperforming as compared to its industry

c.It is improving over time and the company is outperforming as compared to other companies in its industry

d.It is deteriorating over time, and the company is outperforming as compared to other companies in its industry

e.None of the above statements are correct