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You are asked to examine a balance sheet for a friend's farm. You find in the ratio analysis tab a debt-to-asset ratio is 0.21 and

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You are asked to examine a balance sheet for a friend's farm. You find in the ratio analysis tab a debt-to-asset ratio is 0.21 and an equity-to-asset ratio is 0.86. What can you conclude about the farm's leverage (D2E ratio)? These ratios are not enough information to compute leverage O Nothing there is error in the balance sheet ratio calculations Leverage Idebt-to-equity is greater than 30, a very weak solvency position - so my friend should not borrow any more to face the farm Leverage debt-to-equity 0.24. strong solvency position and still would be if my friend borrowed a little more to finance the form

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