Which ONE of the following is a DISADVANTAGE of a HIGH DEBT RATIO?

Group of answer choices

1.Cost of goods sold is substantially higher if a company has a high debt ratio.

2.A high debt ratio is usually associated with a much lower number of days' sales in accounts receivable.

3.A high debt ratio is usually associated with a much lower number of days' sales in inventory.

4.If return on assets is lower than the interest rate associated with the high debt, profits can be reduced dramatically.